RBI cuts CRR, policy rates unchanged

And while we are on the topic of the RBI, the central bank has in its latest decision decided to inject liquidity into the system. In its third quarter review of monetary policy, the central bank cut the cash reserve ratio (CRR) by 0.5% bringing it to 5.5%. This move is expected to ease liquidity by injecting Rs 320 bn in the system. Policy rates on the other hand remained unchanged. But, there were also a few ominous warnings in the review. The RBI reiterated that sustained policy and administrative action is needed to stem the inflation problem. As mentioned earlier, the rocky fiscal position that India is in spells a threat to inflation. Concerns on high fuel prices, manufacturing inflation and rupee depreciation post upwards risks to prices. While the projection for headline inflation was left at 7%, India's GDP growth expectation was cut to 7% from 7.6% previously. Weak global growth and slower industrial production are to blame. Now, next on every investor 's watch list has to be the latest Union Budget. We hope this will put forth the policy action India needs badly.