MUMBAI: The Reserve Bank of India on Tuesday said managing liquidity was its highest priority along with keeping a vigil on price stability to ensure growth momentum.
"The Reserve Bank's focus is to continue with its vigil on price stability...while operational liquidity management is the most challenging task," RBI Governor Y V Reddy said.
The central bank on Tuesday hiked the cash reserve ratio (CRR) by 0.5 per cent to 7 per cent while keeping key policy rates unchanged. It also removed the reverse repo ceiling ceiling of Rs 3,000 crore in its first quarter review of its monetary policy for this fiscal.
The CRR hike is expected to suck out Rs 16,000 crore of liquidity from the system, Reddy said.
The economic growth was domestic demand-driven and one had to recognise that nearly 95 per cent of investments were emanating from domestic savings. Though global factors were important, RBI's predominant consideration would be the domestic economic situation, he said.
"Growth continues to be strong and a 8.5 per cent growth projected was a good figure," he said, adding that "growth impulses are strong and we can be positive on growth".
On inflation, Reddy said fear of high inflation continued to remain in the minds of the people. "Inflation is out of newspaper headlines but is it out of the minds of people?" he asked.
Reddy said some factors indicated a moderation in inflation, but international oil prices were rising and so, there was a need to keep a vigil on inflation.
http://inwww.rediff.com/newshound/b.../story?id=3164687&page=1&CMP=OTC-RSSFeeds0312
"The Reserve Bank's focus is to continue with its vigil on price stability...while operational liquidity management is the most challenging task," RBI Governor Y V Reddy said.
The central bank on Tuesday hiked the cash reserve ratio (CRR) by 0.5 per cent to 7 per cent while keeping key policy rates unchanged. It also removed the reverse repo ceiling ceiling of Rs 3,000 crore in its first quarter review of its monetary policy for this fiscal.
The CRR hike is expected to suck out Rs 16,000 crore of liquidity from the system, Reddy said.
The economic growth was domestic demand-driven and one had to recognise that nearly 95 per cent of investments were emanating from domestic savings. Though global factors were important, RBI's predominant consideration would be the domestic economic situation, he said.
"Growth continues to be strong and a 8.5 per cent growth projected was a good figure," he said, adding that "growth impulses are strong and we can be positive on growth".
On inflation, Reddy said fear of high inflation continued to remain in the minds of the people. "Inflation is out of newspaper headlines but is it out of the minds of people?" he asked.
Reddy said some factors indicated a moderation in inflation, but international oil prices were rising and so, there was a need to keep a vigil on inflation.
http://inwww.rediff.com/newshound/b.../story?id=3164687&page=1&CMP=OTC-RSSFeeds0312