Admitting that the monetary policy decision this time was much more complex and challenging, RBI Governor, Dr. D Subbarao today said in Mumbai that the focus now is on managing recovery than managing crisis.<br/><br/>Dr. Subbarao said that the scope for error and tolerance levels is low with the economic recovery suddenly gaining momentum. In its third quarter review of Monetary Policy 2009-10, the RBI announced a hike in the Cash Reserve Ratio – CRR by 75 basis points to 5.75 per cent. The central bank decided to keep the repo rate and reverse repo rate unchanged.<br/><br/>Expressing huge concern over the rising food prices and the spillover of WPI inflation to other sectors, Dr. Subbarao said that the process of recovery and normalization has to start with liquidity absorption. He added that there may not be any immediate pressure on the economy with the draining of Rs. 36,000 crore due to CRR hike.<br/><br/>The governor also said that inflation is expected to moderate from July 2010. He added that there will still be sufficient liquidity in the system for the private sector. Discussing about his interaction with the banking community, Dr. Subbarao said that the banks have assured him that there will not be any immediate rise in the interest rates.<br/><br/>He added that the banks fear a rise in the Non Performing Assets -NPAs and are concerned about expanding capital. The bankers have asked the governor for a policy intervention initiative on the growing exposure been given to the infrastructure sector. The banks have also said that the loan growth prospects remain favorable.<br/><br/>The Reserve Bank today also raised the economic growth forecast for the current fiscal to 7.5 per cent. Announcing this change in stance, Dr. Subbarao said that assuming a near zero growth in agricultural production and continued recovery in industrial production and services sector activity, the baseline projection for GDP growth for 2009-10 can be raised to 7.5 per cent.