NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » RBI leaves interest rates unchanged

RBI leaves interest rates unchanged

Last updated on: July 26, 2005 13:20 IST

The Reserve Bank of India on Tuesday left all the key interest rates untouched in the first quarterly review of the Monetary Policy, keeping its stance for Monetary Policy for 2005-06 unchanged.

The RBI has left bank rate unchanged at 6%. The reverse repo rates remain unchanged at 5 per cent. The cash reserve ratio, CRR, too remains the same.

The RBI, however, increased the risk weight for capital market exposure to 125 per cent, and on real estate exposure to 125 per cent from 100 per cent.

It did not change the projection for economic growth and inflation in its first quarterly review of the annual policy for the current fiscal.

The current assessment of macro economic outlook and overall stance remained broadly unchanged from the annual policy statement made in April 2005.

It is apparent that there are several global uncertainties but there are domestic factors which indicate a confidently growing economy in a stable environment, the RBI said.

Q1 review of annual statement on Monetary Policy for 2005-06

The current level of inflation remains moderate both at wholesale level and retail level, the central bank said.

The inflationary outcome turned out consistent with the anticipation at the beginning of the year and underlying inflation remains contained.

However, the pass-through of oil process is not yet complete, the RBI said in its annual policy statement.

The overall industrial growth has maintained a healthy uptrend, though the delayed monsoon has imparted some uncertainties to the likely level of agricultural production.

The non-food credit growth has been significantly buoyant and is getting broad-based.

However, the upswing continues to be driven by housing and real estate and hence greater need to ensure credit quality, the RBI added.

"In sum, the Reserve Bank's current assessment of macroeconomic outlook and the overall stance remains broadly unchanged from the annual policy statement. It is apparent that there are several global uncertainties but there are domestic factors, which indicate a confidently growing economy in a stable environment," the RBI statement said.

"While global factors are getting to be increasingly significant for India, the domestic factors still dominate and the latter point to favouring stability to maintain growth momentum at this juncture while being ready to respond to evolving circumstances," it added.

"Accordingly, the overall stance of Monetary Policy for the remaining part of the year 2005-06 will continue to be as set out in the annual policy statement of April 2005, but the Reserve Bank would respond, promptly and effectively, to the evolving situation depending on the unfolding of the risks," the statement released on Tuesday said.

© Copyright 2018 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.