No change in key interest rates: RBI
New Delhi, Jan 27: Setting aside all speculations, the Reserve Bank of India on Tuesday, Jan 27 announced the third quarter review of the Monetary Policy for 2008-09. RBI maintained status quo on interest rates and made no changes made in the repo rate, reserve repo rate and the cash reserve ratio (CRR).
RBI had reduced the its short-term lending rate by 350 basis points in four steps since Oct 20, including a cut earlier this month, due to the global financial meltdown that hurt business sentiment and reduced demand. RBI predicted that the inflation would be significantly lower than the projected 7 pc by March. Inflation has fallen sharply from a peak of 12.9 per cent in Aug and was at 5.6 per cent in mid-Jan.
RBI said that while easing of monetary policy globally and domestically could pose an upside risk to inflation, it could be offset by falling global commodity prices, including oil. "On balance, however, the inflation outlook is tilted downwards at the current juncture," it said.
In its review of macroeconomic and monetary developments, RBI said that the significant global and domestic developments recently have rendered the outlook uncertain and have increased the downside risks associated with real GDP growth. RBI also said that a survey of forecasters in Dec had placed 2008-09 growth at 6.8 pc, down from 7.7 pc forecast three month earlier.
Though the effect of global recession is witnessed in Indian markets too, the Apex bank has aggressively cut rates and banks' cash reserve requirement since mid-Oct while the government has announced a modest fiscal stimulus to boost the economy. "While downside risks would be extending to the future, the fall in commodity including oil prices and the coordinated fiscal and monetary stimulus are expected to revive the growth momentum," RBI noted.
The Central bank said tax revenues were likely to slow, as a result of moderation in economic activity, which in turn could make attaining the budget deficit targets in the fiscal year ending March 2009 unattainable.
The
government
has
already
said
that
the
fiscal
deficit
will
overshoot
the
budget
target
of
2.5
pc
of
Gross
Domestic
Product
(GDP)
due
to
the
extra
stimulus
packages
announced
to
boost
the
Indian
economy.
OneIndia News (With inputs from Agencies)