rbi credit policy | RBI to announce its mid-quarterly monetary policy review

RBI Governor D Subbarao announced these measures as part of annual credit policy to contain inflation, which is hovering around 9 per cent, and sustain economic growth in the medium-term.

RBI has pegged GDP growth rate for the current fiscal at 8 per cent against the government's projection of 9 per cent. The economy grew by 8.6 per cent in 2010-11.

Keki Mistry, Vice Chairman & CEO, HDFC Limited said, "50 basis point hike has not come as a surprise, bonds yields haven't changed much. Resurgence of inflation in first quarter has taken a lot of people by surprise."

The rate rise was its ninth since March 2010, and exceeded market and economists' expectations for a 25 basis point rise, although the case for stronger action had been building since March headline inflation reached nearly 9 percent.

Standard Chartered Bank in a statement said, "RBI's hawkish stance will continue. There will be more tightening going ahead."

Factoring in the many headwinds such as the very uncomfortable inflation, which stood at 8.98 in March and the rising crude and commodity prices, the Governor pegged down GDP growth by over 1 per cent between 7.4 and 8.5 percent for the current fiscal.

"High oil and other commodity prices and the impact of the Reserve Bank's anti-inflationary monetary stance will moderate growth," Subbarao said.

"Based on the assumption of a normal monsoon, and crude oil prices averaging $110 a barrel over the full year 2011-12, our baseline projection of real GDP growth for 2011-12, for policy purposes is around 8 per cent," he added.

Making a highly ambitious inflation management objective, the policy aims at bringing down inflation to 4 to 4.5 percent for the full fiscal, with a medium term objective of 3 percent.

The Governor, however, said, "RBI's baseline inflation projections are that inflation will remain elevated, close to the March, 11 level (8.98 percent) over the first half of FY12 before declining".]

official website click here  http://www.rbi.org.in/Scripts/Annualpolicy.aspx

rbi credit policy | RBI to announce its mid-quarterly monetary policy review
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