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Infrastructure Sector

First Quarter Review of Monetary Policy 2010-11

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In order to control to rising inflation rate, the central bank has tightened the liquidity flow by raising the repo rate from 5.5 per cent to 5.75 per cent and the reverse repo rate from 4 per cent to 4.50 per cent. Repo rate is the rate at which banks borrow from RBI. Reverse repo rate is the rate at which the central bank borrows money from banks. But Cash Reserve Ratio (CRR) has been kept unchanged at 6 per cent. This asymmetric raise in rates narrows the LAF corridor from 150 basis points to 125 basis points.