Zee Media Bureau
New Delhi: The Reserve Bank of India on Tuesday maintained the status quo with regard to the key interest rate in its monetary policy review in view of the need to curb inflation, which has remained stubbornly high.
The RBI, in its second bi-monthly monetary policy statement, left the short-term lending rate or repo rate and the cash reserve ratio (CRR) unchanged at 8 percent and 4 percent, respectively.
However, as a liquidity inducing-measure, the RBI brought down the Statutory Liquidity Ratio (SLR) — the amount of deposits banks keep in government bonds — by 0.5 percent to 22.5 percent.
The RBI has increased the key repo rate three times since Raghuram Rajan took over as Governor in September.
After meeting Jaitley last week, Rajan had said fighting price increases is a priority and the central bank has always maintained a balance between the need to check inflation and prop up growth.
India`s economic growth remained below the 5 percent mark for the second year in a row at 4.7 percent in 2013-14.
Growth remained subdued at 4.6 percent in the fourth quarter of 2013-14 and during the entire fiscal, mainly due to a decline in manufacturing and mining output.
Rajan has set a target of bringing down consumer price inflation to 8 percent by the end of the fiscal, and to 6 percent by the next fiscal.
Retail inflation (consumer price index) was at 8.59 percent in April year-on-year, after running near or above 10 percent for almost two years through 2013. Food inflation in April stood at 9.66 percent.
With agency inputs
First Published: Tuesday, June 3, 2014, 08:56