New Delhi: The Reserve Bank of India on Tuesday kept its repo rate unchanged at 8 per cent but cut its statutory liquidity ratio by one percentage point to 23 per cent.
Addressing a press conference later in the day, RBI governor D. Subbarao expressed concerns about a shortfall in monsoon rain and the impact it can have on the country’s economy.
“Monsoon hits inflation before it hits growth,” he said.
Here are the highlights from the press conference:
Addressing a press conference later in the day, RBI governor D. Subbarao expressed concerns about a shortfall in monsoon rain and the impact it can have on the country’s economy.
“Monsoon hits inflation before it hits growth,” he said.
Here are the highlights from the press conference:
- Tension between growth and inflation complex to manage
- Inflation has remained around 7% for past three months
- Momentum of core inflation is positive and disturbing
- Output gap is small at the current juncture
- Demand pressures can re-emerge at any time
- Monsoon hits inflation before it hits growth
- Drought may put pressure on the economy
- Wage pressure from MGNREGA could add to inflation
- Oil, rupee to put pressure on input prices
- Further easing from global central banks could add to commodity prices
- Interest rate is not the only factor inhibiting investment
- Liquidity is comfortable and aggregate SLR is 28-29%
- Reducing SLR was consistent with long-term objective
- Some open issues on priority sector guidelines
- Concerns over whether agri sector can absorb 13 per cent direct lending
- Foreign banks concerned about 20 branch cut-off for being brought on par with domestic banks
- Will look at suggestions of bankers on priority sector norms
- Debate over whether real deposit rates impact deposit growth
- See a scope for rate action but cannot say when
- Fiscal action cannot be termed as necessary or sufficient for monetary action
