Highlights
Third Quarter Review of Annual Statement on
Monetary Policy for 2007-08
Dr. Y Venugopal Reddy, Governor, Reserve Bank of
India today (January 29, 2008) presented the Third Quarter Review of Annual
Statement on Monetary Policy for the Year 2007-08.
- Bank Rate, Reverse Repo Rate, Repo Rate and
Cash Reserve Ratio (CRR) kept unchanged.
- The flexibility to conduct overnight or
longer term repo including the right to accept or reject tenders under the
liquidity adjustment facility (LAF), wholly or partially, is retained.
- Overall real GDP growth projection for
2007-08 at around 8.5 per cent is retained.
- The policy endeavour would be to contain
inflation close to 5.0 per cent in 2007-08 while conditioning expectations
in the range of 4.0-4.5 per cent.
- While non-food credit has decelerated,
growth in money supply and aggregate deposits of scheduled commercial banks
continue to expand well above indicative projections.
- High growth in reserve money is driven by
large accretion to RBI’s net foreign exchange assets.
- Liquidity management will assume priority
in the conduct of monetary policy through appropriate and timely action.
- Barring the emergence of any adverse and
unexpected developments in various sectors of the economy and keeping in
view the current assessment of the economy including the outlook for growth
and inflation, the overall stance of monetary policy in the period ahead
will broadly continue to be:
- To reinforce the emphasis on price
stability and well-anchored inflation expectations while ensuring a
monetary and interest rate environment conducive to continuation of the
growth momentum and orderly conditions in financial markets.
- To emphasise credit quality as well as
credit delivery, in particular, for employment-intensive sectors, while
pursuing financial inclusion.
- To monitor the evolving heightened
global uncertainties and domestic situation impinging on inflation
expectations, financial stability and growth momentum in order to
respond swiftly with both conventional and unconventional measures, as
appropriate
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