Highlights of Monetary Policy Review by RBI

Following are the highlights of the mid-term review of India’s monetary policy conducted by Reserve Bank of India (RBI) Governor D. Subbarao Friday: –

1. Bank rate, repo rate and reverse repo rate kept unchanged
2. Flexibility retained to conduct overnight auctions of securities
3. Cash reserve ratio kept unchanged at 6.5 per cent
4. Floating rate bonds to be issued at appropriate time
5. Interest rate futures contracts to be launched in early 2009
6. Domestic oil, shipping firms permitted to hedge foreign exchange risk overseas
7. Economic growth forecast for 2008-09 revised to 7.5-8 percent
8. Inflation rate projection retained at 7 percent by end-March 2009
9. Commitment to bring down inflation to 5 percent at the earliest
10. Commitment to moderate the rate of money supply to 17 percent
11. Guidelines by November to rehabilitate potentially viable but sick small units
12. A model scheme for financial literacy and credit counselling centres to be notified
13. Signs of deterioration in the fiscal situation adding to demand pressures