The Reserve Bank of India has reduced the marginal standing facility (MSF) rate by 75 basis points from 10.25 per cent to 9.5 per cent with immediate effect in its mid-quarter review of monetary policy for 2013-14 announced today. It has also reduced minimum daily maintenance of the Cash Reserve Ratio (CRR) from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning 21 September 2013. It has however kept the CRR at 4 per cent.

The RBI has increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.25 per cent to 7.5 per cent with immediate effect.

Consequently, the reverse repo rate under the LAF stands adjusted at 6.5 per cent and the Bank Rate stands reduced at 9.5 per cent with immediate effect. With these changes, the MSF rate and the Bank Rate are recalibrated to 200 basis points above the repo rate.

The apex bank has also stated that WPI inflation, which had eased in the first quarter of 2013-14, has started rising again and it will be higher than initially projected over the rest of the year. Today’s monetary policy review was the first monetary policy of RBI Governor Raghuram Rajan.