Local factors have taken precedence and the Reserve Bank of India has left the repo and reverse repo rate untouched. The central bank has, however, gone in for another 25 basis points (bps) hike in CRR to 8.25 per cent in the annual policy announced on Tuesday. This will drain the system of Rs 9,250 crore of liquidity.
The CRR has been hiked on the review of ongoing liquidity situation. RBI aims at bring down inflation to 5.5 pc in 2009.The money supply targets have been downgraded from 17 -17.5 per cent last year to 16.5 to 17 pc for 09. The policy aims at credit growth of 20 per cent in 2008. The bank is very optimistic on growth and had pegged GDP growth target at 8 - 8.5 per cent for 09.
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