BANKING AWARENESS: RBI THIRD QUARTER MONETARY POLICY ********************************************** In the Third Quarter Monetary Policy, the Reserve Bank of India has sprang up a big surprise by hiking up the key interest rates by 0.25% to tame inflation. This policy clearly communicates that the price stability remains the overriding objective of the RBI’s monetary policy and the focus has shifted from WPI-based inflation to CPI-based inflation. This review is according to the Urijit Patel Committee Recommendations. The monetary policy review to be followed for the next two months. Next monetary policy review of the RBI will be on the 1st April 2014. Some key features of Third Monetary Policy: • Key lending rate hiked by 0.25 per cent to 8 per cent • Cash reserve ratio kept unchanged at 4 per cent • Marginal Standing Facility (MSF) rate stands at 9 per cent • GDP growth to be less than 5 per cent in the current fiscal • Growth to improve to 5.5 per cent in 2014-15 • Current Account Deficit to be below 2.5 per cent this fiscal • March-end inflation could exceed 8 per cent • Rate hike will set economy securely on disinflationarypath • Growth likely to lose momentum in Q3 of 2013-14 • Slowdown in economy getting increasingly worrisome • Inflation is a tax that is grossly inequitable, falling hardest on the very poor • Fiscal and monetary authorities should continue to work for macroeconomic stabilization • Henceforth, policy review to take place every two months =================
Posted on: Tue, 11 Feb 2014 04:11:58 +0000
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