Third Bi-monthly Monetary Policy Statement, 2015-16 - August 2015)
- Monetary and Liquidity Measures
- On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
- policy repo rate under the liquidity adjustment facility (LAF) unchanged at 7.25 per cent
- cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL)
- continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions
- continue with daily variable rate repos and reverse repos to smooth liquidity
Observations:
- Economic recovery is still work in progress
- Hardening of inflation, excluding food and fuel, is most
- Retains growth target at 7.6 per cent for 2015-16
- RBI says banks have passed on an average 0.3% interest rate cut as against its 0.75% rate cut since January
- Govt’s capital infusion in PSBs to help loan growth and transmission of interest rate cuts as well as ease liquidity
- After strong rainfall in June, July has been below par, but overall monsoon is near normalMost worrisome is sustained hardening of inflation except food and fuel
