Reserve Bank of India furnished its third quarter review of monetary policy for the year 2007-08 on 29th January, 2008. Following the 75 basis point cut by the US Fed, it was expected that RBI would also come out with significant rate cuts. However, to everyone's surprise, it kept the Bank Rate (6 per cent), Reserve Repo Rate (6 percent), Repo Rate (7.75 per cent) and Cash Reserve Ratio (7.75 percent) unchanged. The overall real GDP growth estimation for 2007-08 has been retained to 8.5 per cent. It can be deduced that the rates have been kept unchanged in anticipation to a probable inflationary pressure and unstable international scenario. To keep the domestic economy stable, inflation rate will be strictly maintained between 3 to 5 per cent.
As per the review, primary articles registered a year-on-year increase of 3.9 per cent as against 9.5 per cent last year. Manufacturing inflation has been recorded to be 3.9 percent on January 2008, as compared to 5.8 percent last year. Consumer price index (CPI) for industrial workers (IW) declined by 5.5 per cent on a year-on-year basis in November 2007 from 6.3 percentage of change a year ago.
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