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RBI Eases SLR .5%; Inflation Worries Keep Repo Unchanged

AUGUST 05, 2014

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RBI Eases SLR .5%; Inflation Worries Keep Repo Unchanged


In the latest monetray policy review, the RBI has reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points to 22.% effective fortnight beginning August 9, 2014. As per the RBI, the recent moderation in Consumer Price Index inflation for two consecutive months has been due to base effects and a fall in in CPI inflation excluding food and fuel. It also notes that the the recent fall in crude prices, softening of global commodity prices and subdued corporate pricing should favour a fall in inflation in future.

The RBI, however, has cautioned that the risks remain in the form of the higher administered prices, monsoons and their impact on food prices, higher oil prices, rupee-dollar movement, and strengthening growth. These arte the resaons offered by the RBI for a vigilant monetary policy, while leaving the policy ratesunchanged.

The RBI has opened up space further for credit easing to the productive sectors in response to financing needs. Accordingly, the SLR has benn reduced by a  0.5 % of NDTL (Net Time and Demand Liabilities).


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