The Hindu Business Line : Highlights of RBI's third quarter monetary policy review

Repo rate unchanged at 7.75%.
Reverse repo rate unchanged at 6.00%.
Bank Rate unchanged at 6.00%.
CRR unchanged at 7.50%. Has flexibility to change reverse repo, repo rates.
CRR unchanged on review of current liquidity situation.
Retain inflation aim 4.0-4.5% FY08, 3% for medium term.
GDP growth target maintained at 8.5% FY08.

Policy Stance:

Emphasis is on price stability, anchor inflation.
Emphasise credit delivery, pursue financial inclusion.
Watch rising global uncertainties impact on inflation.
Monitor domestic situation impinging on inflation expectations.
To respond swiftly with appropriate measures.

Inflation:

Inflation to go up even if fuel prices unchanged.
Underlying aggregate demand pressures remain.
Inflation has remained within 'tolerable' levels.
Liquidity, asset prices upward risks to inflationary pressures.
Threat to domestic price stability rise, volatile.
Threat to local price stability 'serious risk' to inflation.
Need to more oil price pass-through locally.
Risks to inflation from high crude prices have increased.
Risks to inflation also from food, metal prices.
FX flows, asset prices, monetary aggregates pose tough challenges.
Financial markets warrant careful, continuous monitoring.
Upside risks to inflation stronger going ahead. Inflation has risen since December due to base effect.
Base effect impact on inflation seen till mid-February. Consumer prices remain high despite softening in Oct-Dec.

Liquidity:

Liquidity management will assume priority for policy.
To take timely action to manage liquidity.
Domestic liquidity condition more expansionary now.
Liquidity condition may be amplified by global factors.
Central banks' liquidity injection expansionary for domestic liquidity.

Growth:

Domestic outlook positive with prospects of sustaining growth momentum.
Indication of moderation in business confidence.
Domestic activity continues to be investment driven.
External sector developments dominated by FX flows.
Large FX flows reflect investor confidence in India.
Economy prospects consistent with expectations for rest of FY08.
Aggregate supply conditions expanded in all sectors.
Investment boom to improve supply elasticities.
Corporate profits, business confidence remain sustained.

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