Passing the buck on policy

In its third quarter review of monetary policy, released on Tuesday, the Reserve Bank of India kept the policy rate — the repo rate for banks — constant at 8.5 per cent, while cutting the cash reserve ratio (CRR) by 50 basis points, from 6.0 per cent to 5.5 per cent of their net demand and time liabilities. The RBI has argued that the latter action can be taken to ease liquidity without diluting its current policy stance.

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