Credit Policy: RBI hikes CRR by 50bps to 7%

The Reserve Bank of India (RBI) today hiked the cash reserve ratio (CRR) by 50bps to 7% from 6.5%  effective August 4.

The central bank left the key rates unchanged. While the Bank Rate has been unchanged at 6%, the repo rate is steady at 7.75%, and the reverse repo rate has been left untouched at 6%.

On liquidity, the central bank said: "In view of the current macroeconomic and overall monetary and liquidity conditions, it has been decided to withdraw the ceiling of Rs. 3,000 crore on daily reverse repo under the LAF with effect from Monday, August 6, 2007. The Reserve Bank, however, retains the discretion to re-impose a ceiling as appropriate.

The mid-term review of the annual policy statement for the year 2007-08 will be undertaken on October 30, 2007, the release added.