RBI mid-quarter policy review: Highlights

RBI keeps key policy rate, cash reserve ratio unchanged.

PTI| Last Updated: Dec 18, 2013, 12:00 PM IST

Mumbai: RBI Governor Raghuram Rajan surprised the markets on Wednesday by leaving all key policy rates unchanged, notwithstanding persistent high inflationary pressure.

The short-term lending rate was kept unchanged at 7.75 percent, while the cash reserve ratio (CRR) remained at 4 percent, the Reserve Bank of India said in its Mid-Quarter Monetary Policy Review.

Following are the highlights of RBI's mid-quarter review of monetary policy:

* RBI keeps key policy rate, cash reserve ratio unchanged.

* Repo rate unchanged at 7.75 percent; cash reserve ratio unchanged at 4 percent.

* RBI to wait for more data before taking policy action.

* Outlook on global growth continues to remain moderate.

* Volatility in the financial markets could pick up following the inevitable taper of the quantitative easing in the US.

* Lacklustre indicators on services and subdued domestic consumption point at continuing headwinds to growth * Expenditure cuts by Govt will only add to the pressures on the growth front.

* Revival of stalled investments crucial for growth.

* High inflation numbers risks entrenching inflation expectations at unacceptably elevated levels.

* High and persistent inflation also increases the risks of exchange rate instability.

* RBI expects inflation to be contained on vegetable prices going down sharply.

* Current inflation is high but its trajectory is uncertain and there is merit waiting for more data.

* RBI to be vigilant and will act between scheduled policies if expected softening in food prices does not materialise.