The RBI today (31st Jul 2012) has decided to keep the interest rates unchanged to curb inflation. The following are the key decisions taken.
- The amount which the banks deposit in government bonds also called as statutory liquid ratio has been decreased by 1% and its now 23%. This would mean that around 6200 crore which the banks currently invest in bonds can be used to give loans.
- The rate at which banks borrow money from RBI (Repo/lending rate) has been kept the same at 8%. (Had this been cut down, we would have seen the markets rally).
- The amount which banks deposit with RBI (CRR) also has been kept unchanged to 4.7%.
- The GDP forecast has been bought down to 6.5% from the earlier 7.5%.
- The projected year end inflation index has been raised to 7% from the earlier forecast of 6.5%
The above pointers will make the market react and swings are expected. Trade with caution.