RBI hikes CRR by 25bps

In the Monetary policy review, the RBI has raised CRR by yet another 0.25% TO 8.25%. CRR hike is effective from May-24, 2008. It has left Bank Rate, Reverse Repo Rate and Repo Rate unchanged.

RBI has set a high priority to price stability, well-anchored inflation expectations and orderly conditions in financial markets while sustaining the growth momentum.

Softened GDP growth projection for 2008-09 in the range of 8.0- 8.5 per cent. Inflation to be brought down to around 5.5 per cent in 2008-09 with a preference for bringing it close to 5.0 per cent as soon as possible. [How are you going to do it with every Industry functioning as a Big Lobby ? Looks to me just an empty assurance. ] Going forward, the resolve is to condition policy and perceptions for inflation in the range of 4.0-4.5 per cent so that an inflation rate of around 3.0 per cent becomes a medium-term objective. [Is the RBI Kidding ?]

The limit of bank loans to individuals for housing having lower risk weight of 50 per cent enhanced from Rs. 20 lakh to Rs. 30 lakh.