Friday, September 20, 2013

Rajan Surprises, RBI Increases Repo Rates by .25%

New Reserve Bank of India governor Raghuram Rajan, in a surprise move, raised the repo rate by 25 basis points to 7.5 per cent as he presented his first monetary policy review after taking over earlier this month.

With this, the reverse repo rate, or the rate at which the RBI sucks out liquidity, stands revised at 6.5 per cent.

The central bank also revised the Marginal Standing Facility - the rate at which banks access funds for emergency needs - by 75 basis points to 9.5 per cent. Former governor D. Subbarao had raised the MSF by 200 basis points in July as part of slew of cash tightening steps aimed at rescuing the rupee.

The cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, stands unchanged at 4 per cent.

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- Unknown Updated at: Friday, September 20, 2013

Tuesday, July 30, 2013

Market : RBI keeps all Interest Rates Unchanged, concern on growth forecast

MUMBAI: Weighed down by a weak rupee, the Reserve Bank on Tuesday chose to keep all key interest rates unchanged and asked the government to take urgent steps to reign in the high current account deficit.

Lowering the GDP growth projection for the current fiscal to 5.5% from 5.7%, the central bank said the external sector is the "biggest threat" to economic stability.

It also said that the recent liquidity tightening measures, taken to support the rupee, will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling it to revert to the policy of supporting growth with continuing vigil on inflation.

The RBI will endeavour to keep inflation, which is under threat from a depreciating rupee, at 5% by March end.

"The policy stance is guided by the need for continuous vigil and preparedness to pro-actively respond to risks to the economy from external developments, especially those stemming from global financial markets," Governor D Subbarao said in what would be his last policy announcement unveiled here.

Accordingly, the repo rate or the rate at which RBI lends to the system, has been retained at 7.25% and the cash reserve ratio, the amount of deposits banks park with RBI, has been kept unchanged at 4%...