Guv Raghuram Rajan's RBI kept its key policy repo rate unchanged on Tuesday as widely expected, but warned about inflationary risks should a shortfall in monsoon rains spark a surge in food prices.
The RBI kept the repo rate unchanged at 8.00 percent as expected by nearly all 43 economists polled by Reuters ahead of the policy review. The repo rate has been unchanged since January, when the RBI increased it by a quarter percentage point.
Following are the highlights of RBI's bi-monthly monetary policy statement:
* Short-term lending (Repo) rate unchanged at 8 per cent
* Cash reserve ratio (CRR) unchanged at 4 pc
* SLR cut by 0.50 pc to 22 pc to unlock banking funds
* Estimates GDP growth at 5.5 pc for current fiscal
* Targets 8 pc CPI inflation by Jan 2015, 6 pc by Jan 2016
* Lowers banks' SLR holdings in held-to-maturity category by 0.5 pc to 24 pc
* Govt policies to improve domestic demand, supply conditions
* Higher oil prices, pass-through of administered price increases pose upside risks to inflation
* Monsoons still a concern, posing risks to inflation
* Govt action on food management and fast-tracking project completion to improve supply
* Banking sector reforms will continue
* Next bi-monthly policy statement on September 30.