RBI has hiked the CRR – Cash Reserve Ratio by a whopping 75 bps instead of the expected 50 bps. CRR will change from 5% to 5.75% and will be effective in two stages 50 bps effective Feb-13 and the second 25bps on Feb-27. The hike will suck Rs 36,000 cr of liquidity from the market.
RBI for now has left the Repo and Reverse Repo Rates unchanged.
As outcome of CRR hike, the RBI said,
Reduction in excess liquidity will help anchor inflationary expectations. The recovery process will be supported without compromising price stability. The calibrated exit will align policy instruments with the current and evolving state of the economy.
The next date for review of monetary policy will be announced on April-20th.