MONETARY POLICY 2011-12 Repo rate hiked by 50 bps from 6.75% to 7.25% Reverse Repo rate hiked by 50 bps from 5.75% to 6.25% (dependent variable on the Repo rate – 100 bps below the Repo rate) CRR kept unchanged at 6% SLR kept unchanged at 24% GDP growth projection for FY 2011-12 placed at around 8% (in the range of 7.4% and 8.5%)
CONT- FY 2011-12 March end WPI inflation baseline projection placed at 6% with an upward bias M3 growth projected at 16%, deposit growth at 17% and non-food credit growth at 19% Bank rate kept unchanged at 6%. MSF introduced at 1% above the Repo rate (8.25%) LAF corridor width set at 200 bps (with base at reverse repo – 6.25% & ceiling at MSF – 8.25%) MP 2011-12.docx
FIRST QUARTERLY REVIEW Increase / (Decrease) At present since March 2010Repo Rate .5% 8%.Reverse Repo Rate .5% 7%Cash Reserve Ratio Unchanged 6%.Statutory Liquidity Unchanged 24%RatioBank Rate Unchanged 6%
KEY FEATURES GDP growth projection for FY 2011-12 kept unchanged at around 8% Inflation projection for March end FY 2011-12 revised upwards to 7% from 6%
SECOND QUARTERLY REVIEW Increase / (Decrease) At presentRepo Rate .25% 8.5%Reverse Repo Rate .25%. 7.5%Cash Reserve Ratio Unchanged 6%Statutory Liquidity Unchanged 24%RatioBank Rate Unchanged 6%
KEY FEATURES RBI lowered the growth forecast for 2011-12 from 8% to 7.6% (in line with our expectations) Inflation forecast is kept at 7% by Mar-12 end. Money supply and Credit growth maintained at 15.5% and 18% respectively Depreciation of the rupee has emerged as another risk for inflation. Indian economy continued to face suppressed inflation as prices are administered in petroleum sector.
KEY FEATURES The drop in November 2011 WPI inflation to 9.11%, mainly due to softening in food inflation (4.35% for the week ended December 3, 2011) GDP growth rate has fallen to 6.9% from 7.7%(expected in Q2) Due to sharp moderation in industrial growth to -5.1% The fiscal deficit at 74.4% of budgeted 2011-12 was significantly higher than 42.6% in 2010-11
CONT- FDs (Fixed Deposits) are offering interest in the range of 7.25% - 9.40% p.a. Projection of GDP growth for 2011-12 is revised downwards from 7.6% to 7%. In reducing the CRR,INR 320 bn of primary liquidity will be injected into the banking system