by NR INDRAN / INT

By slashing CRR by 25 bps in its Mid Term Review, RBI has acted with prudence.  While acknowledging the upward bias to inflation,it has simultaneously provided a push to growth through a CRR cut.

The reduction in CRR will augment primary liquidity and free the lendable resources of banks to the extent of Rs.17,000 Cr.

RBI hasdone a fine balancing act between growth and inflation. However, going forward, it will keep a close watch on liquidity and growth front.

RBI has once again demonstrated that a rate cut is contingent on inflation easing to the comfort zone.

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