First Quarter Review of Monetary Policy 2012-13: RBI reiterates its past stance
- RBI keeps policy rates unchanged for the second time since June giving priority Inflation over Industry growth.
- RBI Cuts SLR To 23% from 24% effective August 11
- Policy rate status: CRR stands at 4.75% (Unchanged), Repo rate stands at 8.00% (Unchanged), Reverse Repo rate stands at 7.00% (Unchanged) and SLR reduced from 24% to 23% effective from August 11.
The Reserve Bank of India left interest rates unchanged for the second time since June, in line with expectations, while cutting its growth forecast and lifting its inflation outlook as economic conditions deteriorate.
Following are the key risk cause to lower down GDP growth expectation from 7.3% to 6.5%:
- Deficit and Weak monsoon
- Growth decelerated significantly to 6.5% in 2011-12
- Increased global risk
- WPI inflation inches up
- Uncertain Crude Price
- Current levels of the Current Account Deficit and the fiscal deficit
- The global economy is slowing down. Among the BRICS countries, growth in China, Brazil and South Africa fell in Q1
- Among the BRICS countries, inflation fell significantly in China and Russia. It also eased in Brazil and South Africa. Even as growth in India is slowing, it is clearly an outlier insofar as inflation is concerned
- In recent weeks, renewed concerns about Greece and the need for greater collective support to Spain and Italy have amplified risks
- GDP growth decelerated over four successive quarters from 9.2% in Q4 of 2010-11 to 5.3% in Q4 of 2011-12.
- Significant slowdown in industrial growth as well as deceleration in services sector activity pulled down the overall GDP growth to 6.5% for 2011-12, below the Reserve Bank’s baseline projection of 7%.
- Growth in IIP decelerated from 8.2% in 2010-11 to 2.9% in 2011-12. Further, IIP growth during April-May 2012, at 0.8%, was significantly lower than the expansion of 5.7% registered in the corresponding period of last year.
The Reserve Bank decided to pause even in the face of slowing growth. Major elements are:
- To anchor inflation expectations;
- To support a sustainable growth path over the medium-term; and
- To continue to provide liquidity to facilitate credit availability to productive sectors.
The next Mid-Quarter Review of Monetary Policy for 2012-13 will release on Monday, September 17, 2012.
Click here to read the full report
We, Shilpa Stock Broker Pvt. Ltd is the entity which carved quite a unique niche under that we facilitate you to crystallize & transform into better odds of the finance. We do have a vast experience of Indian Capital Market. We are here for more than a decade. Our root goes back to the year 1999, when a conglomeration of intelligentsia laid foundation of this entity. Shilpa Stock Broker Pvt. Ltd. is engaged in client based business and proprietary trading as well.
For more information please write in to email@example.com
Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.
- Will RBI rate cut keep inflation under check in 2015?
- RBI's Rate Cut: The beginning of a low interest rate regime
- RBI cuts repo rate in a surprise move
- Note on RBI rate cut
- RBI cuts repo rate by 25 basis points to 7.75%
Have a question?
Also On IndiaNotes.Com
- Q3FY15 Results: Idea Cellular continues with its strong operational performance
- HDFC Bank: In-line quarter; individual loan growth remains on track