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Following are the highlights of the RBI’s second quarter review of monetary policy 2013-14:
* Repo or short-term lending rate up by 0.25 per cent to 7.75 per cent.
* Cash reserve ratio unchanged at 4 per cent.
* Marginal standing facility (MSF) rate cut by 0.25 per cent to 8.75 per cent.
* Difference between repo and MSF rate narrows to 1 per cent.
* Repo hiked due to upturn of inflation, other factors.
* Wholesale inflation expected to be higher than current levels; warrants ‘appropriate policy response’.
* Retail inflation to hover around 9 per cent.
* Food price pressures may ease with the arrival of summer crop harvest and seasonal moderation.
* Prospect of delay in taper of US Fed Reserve’s bond purchases has brought calm to financial markets.
* Normalcy will be restored in the forex market only when OMCs fully return to the market for their demand.
* FY14 GDP growth estimate revised downward to 5 per cent vs. 5.7 per cent.
* Growth likely to pick up in second half on good show in exports and agriculture.
* Liquidity pressures building on small businesses as large entities holding on payments; remedies lie in speeding-up of Government and PSU payments.
* Average drawdown from MSF has declined to Rs 0.4 trillion by mid-Oct, down from a high of Rs 1.4 trillion in mid-Sep
* Final guidelines on unhedged forex exposures by corporates to be out by December
* Jalan panel on new bank licenses to hold first meet on Nov 1, decision of RBI on in-principle approvals will be final.
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