The RBI on Tuesday Oct 30,2012 cut the cash reserve ratio (CRR)by 25 basis points to 4.25%, but kept the key policy rates including the repo rate unchanged.
This reduction will be with effect from November 3,2012.
The CRR reduction cut is meant to inject Rs 17500 crore into the banking system. It is intended to pre-empt prospective liquidity crunch.
RBI preferred not to reduce the policy rates as it was not seeing easing of inflation in the near future. Inflation turned up again in September, reflecting a partial pass-through of adjustment of diesel and electricity prices, and elevated inflation in non-food manufactured products.
While announcing the review of its monetary policy for 2012-13 -
RBI revised downwards the projection of GDP growth for 2012-13 from 6.5 % to 5.8%
RBI raised projection for headline WPI inflation for March 2013 to 7.5 per cent from 7 per cent indicated in July 2012
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