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Business News/ Politics / Policy/  RBI to unveil third bi-monthly policy review on 5 August
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RBI to unveil third bi-monthly policy review on 5 August

The central bank will come out with its bi-monthly monetary policy review amid hopes of a rate cut to boost manufacturing

In its last policy review in June, the RBI had kept the repo rate—at which it lends to the banks—unchanged at 8%. Photo: BloombergPremium
In its last policy review in June, the RBI had kept the repo rate—at which it lends to the banks—unchanged at 8%. Photo: Bloomberg

Mumbai: Amid expectations of a rate cut to boost industrial activities, the Reserve Bank of India (RBI) on Thursday said it will come out with its third bi-monthly monetary policy review on 5 August.

The central bank in a release said: “The Reserve Bank of India will announce the Third Bi-monthly Monetary Policy Review, 2014-15 on Tuesday, August 5, 2014." In its last policy review in June, the RBI had kept the repo rate—at which it lends to the banks—unchanged at 8%.

Exhibiting signs of revival, India’s manufacturing activity, gauged by the index of industrial production (IIP), had rose to 19-month high of 4.7% in May on account of improved output from mining, power and capital goods sector.

Besides improved industrial activity, retail inflation fell to a 30-month low of 7.31% in June as prices of food items, including vegetables, came down. Wholesale price index (WPI) -based inflation in June fell to 5.43% after rising to a five-month high in the previous month.

However in June policy, RBI had cut the statutory liquidity ratio (SLR) by 0.5% to 23% that allowed banks to have an additional 40,000 crore and expanded their scope for more freedom to give credit to non-government sector.

Committed to keeping the economy on a disinflationary course, considering CPI inflation at 8 per cent by January 2015 and 6% by January 2016, RBI said that further policy tightening will not be warranted if the economy stays on this course.

“On the other hand, if disinflation, adjusting for base effects, is faster than currently anticipated, it will provide headroom for an easing of the policy stance," it had said.

Country’s largest lender, State Bank of India chairperson Arundhati Bhattacharya last week had said that the RBI was likely to keep interest rate intact in its upcoming monetary policy review next month.

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Published: 31 Jul 2014, 10:25 PM IST
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