The Reserve Bank of India has managed a delicate balancing act in the third quarter review of monetary policy 2011-12.
The reduction in cash reserve ratio (CRR) by 0.50 percentage point to 5.5 per cent will somewhat ease the tight liquidity conditions in the money market. The Hindu : Opinion / Editorial : The RBI's balancing act. While the decision to leave interest rates unchanged sends a clear signal that the apex bank is still not comfortable with the overall picture on inflation.
The RBI is clear that the budget should come up with policy initiatives to induce investment and concrete measures for fiscal consolidation, if it is to start pegging rates down.
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