RBI keeps repo rates unchanged, lowers SLR
05 Aug 2014
August 5: The RBI kept its key policy repo rate unchanged as widely expected, but warned of inflationary risks in case a shortfall in monsoon rains led to surge in food prices.
The Reserve Bank of India also announced measures to free up resources for banks to lend.
The RBI lowered banks' minimum bond holding requirements, known as the statutory liquidity ratio (SLR), by half a percentage point to 22% to free up more money for lending, effective August 9, 2014.
The RBI also cut the ceiling on debt that must be held-to-maturity (HTM) by half a percentage point to 24%.
"With some continuing uncertainty about the path of the monsoon, it would be premature to conclude that future food inflation, and its spill-over to broader inflation, can be discounted," the RBI said in a statement.
The RBI kept the repo rate unchanged at 8%. The repo rate has been unchanged since January, when the RBI increased it by a quarter percentage point.
Food price inflation remains one of the biggest risks for India, despite government measures to curb hoarding of food articles and setting limits on the export of onions and potatoes, two staples in Indian cooking.