Annual Monetary Policy
RBI has come out with a good credit policy by not touching any policy rates and waiting for the rates to have their effect. Says it would be hawkish to contain inflation and inflation expectation.

• RBI keeps policy rates unchanged: Repo - 7.75%, Reverse Repo - 6%, CRR - 6.5%.........
• GDP forecast lowered to 8.5%
• Money supply growth predicted at 17-17.5%
• Inflation targeted at 5% as against earlier 5-5.5%
. overseas Portfoio investment cap raised to 35% from 25%
. Raises overseas investment limit for firms to 300% of networth
. Companies can prepay their ECBs upto $400m.
. Brings down the risk weight for housing loans from 75bp to 50bp for those below Rs 20mn.
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Reddy's actions seem to be influenced by FM to a large extent. RBI abandoned its exchange rate management n focussed on price stability only after congress lost important state elections. now that exports, auto sales and industrial production growth nos hav come down RBI has stayed away from further tightening.

One thing RBI is consistent is with its inconsistent monetary policy. Well there has to be a particular mandate for the central bank to measure its performance. The central bank bought $45billion trying to keep rupee down and now they let it appreciate by a staggering 9.5% in the last 6months. the re appreciation has eroded the value of Forex held(capital loss of almost $20bn). All these events keeps even the closest watchers of monetary policy guessing.