The Reserve Bank of India (RBI) has decided to keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.75 per cent in its Mid-Quarter Review of Monetary Policy announced today.

It has also kept the policy repo rate unchanged at 8.5 per cent. Last week, the RBI had reduced the CRR by 75 basis points from 5.5 per cent to 4.75 per cent to infuse 48,000 crore rupees into the system to mitigate pressure on account of payment of advance taxes.

According to the press release, since the Reserve Bank’s Third Quarter Review of January 24, 2012, there has been modest improvement in the global macro economic situation.

The apex bank said that the emerging and developing economies (EDEs) are showing signs of growth slowdown. As a result, the global growth for 2012 and 2013 is expected to be lower than earlier anticipated.

The Central Statistics Office (CSO) has estimated the full year growth for 2011-12 at 6.9 per cent, which is in line with the Reserve Bank’s projection.

The apex bank said, on the domestic front, while most indicators suggest that the economy is slowing down, the performance in Q4 of 2011-12 is expected to be better than that in Q3.

However, upside risks to inflation have increased from the recent surge in crude oil prices, fiscal slippage and rupee depreciation.

It said that recent growth-inflation dynamics have prompted the Reserve Bank to indicate that no further tightening is required and that future actions will be towards lowering the rates.

However, notwithstanding the deceleration in growth, inflation risks remain, which will influence both the timing and magnitude of future rate actions.