RBI POLICY REVIEW

 

January, 25, 2012 ( 01:30pm ) :-  The reserve bank of India has reviewed its policy. Banks are borrowing more than 1.2 lakh crore from RBI. Aiming towards the credit policy, the reserve bank of India has not cut down the interest rates. The reserve bank of India was cut the cash reserve ratio by half a percentage point. But it kept the short term lending rate unchanged. The reserve bank of India injected 32000 crore into the system on Tuesday, 24th Jan 2012. The central bank of India has agreed on comfortable with the cut out ratio percentage of cash reserve ratio.

 

Moreover of reserve bank’s credit policy, banking stocks have shown strong response and bank nifty is gaining strength. The RBI has said “the GDP growth rate during the current fiscal year is likely to fall below its earlier projection of 7.6% and it will reach beyond 7% till March end. The RBI governor is most likely to reverse the further policy rates. As the cash reserve rates has been lowered down to 5.5% of their net demand and time liabilities are effective from January 28, 2012. Then it would release the 32000crore amount. This cut of the CRR would inject more liquidity in the banking system that has been far tighter than the RBI’s target.

 

Based on the current rate of inflation and higher demand of all the things, the reducing of policy rates will be considered as premature activity. The RBI Governor “D Subbarao” said this while disclosing the third quarterly monetary policy rates. If there will be excess monetary and liquidity in the banking system, the other banks may reduce the interest rates to attract the borrowers. This policy also shared the view of additional credit around 1.6 lakh crore would be generated in the system during the period of time.

 

As the major challenge of the inflation risks is rising on, the RBI has said to achieve slow and stable inflation is to be pertained with minimal sacrifice of growth. RBI said unless fiscal reforms are expedited, the central could not meet the target of 4.1 % of GDP for 2012-13 as decided in budget. While keeping the repo and reverse repo rates unchanged at 8.5% and 7.5%, the RBI noted the moderating inflation and decelerating growth rate.

 

Nifty  FutureTrend Totally bullish side above 5060 , for a targets 5200 - 5300. If breaks below the 5060 levels then trend totally bearish side.