Annual monetary policy statement for the year 2010-11

The Reserve Bank of India has raised CRR, reverse repo and repo rate by 25bps each in annual monetary policy statement for 2010-11. Though repo and reverse repo rate increase was as per the market expectations, 25bps increase in CRR was lower than our expectation of 50bps. The hike in policy rates is followed by 75bps hike in CRR in the Third Quarter Review of January 2010 and mid-cycle increase of 25 bps each in the repo rate and the reverse repo rate on March 19, 2010.The focal point of monetary policy statement for 2010-2011 has now clearly shifted from growth to inflation management. The growth forecast has been increased to 8% for the year 2010-11 with two key risks being southwest monsoon for 2010 and inflation.