RBI hikes CRR to 8.25 percent, keeps key interest rates unchanged

Mumbai, Apr 29 : The Reserve Bank of India (RBI) today hiked the Credit Reserve Ratio (CRR) by 25 basis points to 8.25 per cent with effect from May 24 and left key interest rates unchanged in its annual the monetary and credit policy for the year 2008-09.

The hike in the CRR, the mandatory amount that banks have to keep with the RBI, followed a two-stage rise earlier in April to 8.0 percent and the second hike has yet to take effect on May 10.

The RBI left its key lending rate unchanged at 7.75 percent and left the reverse repo rate, unchanged at 6.0 percent. The bank rate, which is used to price medium-term and long-term loans, remained at 6.0 percent.

The reverse repo rate is the return banks earn on excess funds parked with the RBI against Government securities.

The RBI projected the GDP growth to be at 8 to 8.5 per cent and aimed to limit inflation around 5.5 per cent.

India's inflation, after hovering around 3 per cent in November 2007, doubled in December 2007 and touched a three-year high of 7.4 per cent by March 29, 2008 largely due to priced fuel group, food and some metal products.

The RBI said high global oil and food prices, which are partially responsible for rising domestic inflation now at over 7 per cent, are likely to remain at elevated levels.

ANI