On 17th September, 2012, RBI undertook
Mid-Quarter Monetary Policy Review
(September 2012) and issued a statement, the highlights of which were : -
* Repo, Reverse Repo, Bank Rate, MSF rates were kept unchanged;
* Cash Reserve Ratio (CRR) has been reduced by 25 basis points to 4.50 percent,
wef fortnight beginning September 22. 2012
* Statutory Liquidity Ratio stays at 23 percent of deposits.
* Primary focus of monetary policy continues to be containing inflation and
anchoring inflation expectations.
* Though demand pressures has moderated, yet supply constraints and
rupee depreciation are imparting pressures on prices.
* As policy actions to stimulate growth materialise, monetary policy will
reinforce the positive impact of these actions while maintaining its focus on
* Government’s recent actions have initiated a shift in expenditure away from
consumption (subsidies) and towards investment (including through FDI).
* See pressures on inflation in the short term due to upward revision in diesel
prices and rationalisation of LPG subsidy.
* Revisions in diesel prices and LPG subsidy were anticipated at the time of
* Risks from global factors, in terms of both capital movements and oil prices,
* There could be pressure on liquidity in next few weeks, due to outflows toward advance tax payments and the onset of festival-related
* Wedge between deposit growth and credit growth could widen on the back of the
seasonal pickup in credit demand in the second half of the year.
* Persistent inflationary pressures alongside risks emerging from twin deficits,
constrain a stronger response of monetary policy to growth risks
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