Abhishek kumar aashish jindal

RBI mid quarter monetary policy review: All rates remain unchanged

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RBI mid quarter monetary policy review: All rates remain unchanged

December 19, 2013

The Reserve Bank of India (RBI) in its mid-quarter Monetary Policy Review kept the interest rates unchanged. By this move, the central bank gave the indication that solely monetary policy can’t deal with the inflation; the government must take initiatives on supply-side reforms and put in place better storage facilities to hold food prices.

This has come as a welcome relief for the industry which is facing depressing economic environment as indicated 1.8% growth in industrial output in November 2013.
What are Key policy rates?

The Key Policy Rates or signally rates are decided by RBI. These are Bank Rate, Repo Rate, Reverse Repo Rate, Marginal Standing Facility, Cash Reserve Ratio and Statutory liquidity ratio (SLR).

On the basis of an assessment of the current and evolving macroeconomic situation, the RBI decided to:

  • Keep the policy Repo Rate under the Liquidity Adjustment Facility (LAF) unchanged at 7.75%, and

  • Keep the Cash Reserve Ratio (CRR) of scheduled banks unchanged at 4.0% of the Net Demand and Time Liability (NDTL).

  • Wait for more data before taking policy action, as current inflation is high but its trajectory is uncertain.

  • Thus, the reverse repo rate under the LAF will remain unchanged at 6.75%, and the Marginal Standing Facility (MSF) rate and the Bank Rate at 8.75%.

Angela Merkel sworn in as German chancellor for 3rd time

December 19, 2013

German Chancellor Angela Merkel sworn in for a third term after being reelected in a vote in the lower house of parliament. The event marks the beginning of the third so-called grand coalition in the Germany’s post-war history.

Merkel’s conservative Union bloc – The Christian Democratic Union (CDU) and Bavarian Christian Social Union (CSU) won 41.5% of vote. To gain absolute majority they formed coalition with their rivals Social Democrats (SPD). By this coalition, for the next four yearsEurope’s biggesteconomy will be ruled by the Germany’s two biggest parties.

The new government faces a host of challenges, from bedding down European reforms aimed at shielding the bloc from future crises, to seeing through Merkel’s costly switch from nuclear to renewable energy, etc.

Note:Angela Merkel is a former research scientist who has been the Chancellor of Germany since 2005, and the leader of the Christian Democratic Union (CDU) since 2000. She is the first woman to hold either office.

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