MEASURES
* Hikes repo rate 25bps to 5.75%, effective immediately
* Hikes reverse repo rate 50bps to 4.50%, effective immediately
* Keeps CRR unchanged at 6.0%
* Keeps Bank Rate unchanged at 6.0%
* Rate hikes to rein in demand pressures, moderate inflation
PROJECTIONS
* FY11 GDP growth projection upped to 8.5% vs 8.0% earlier
* Mar-end WPI inflation projected at 6.0% vs 5.5% earlier
* FY11 credit growth projection kept unchanged at 20%
* FY11 M3 growth projection kept unchanged at 17%
STANCE
* To achieve price stability, anchor inflationary expectations
* To continue to assess all measures of inflation
* Need to note moderation in inflation FY01-FY10
* Policy commitment to keep inflation down a reason for WPI ease
INFLATION
* Inflation "significantly" driven by demand factors
* Hike in fuel prices to have inflationary impact
* See 2nd round effect of fuel price hike on WPI coming months
* Food prices at elevated level, reflect supply bottlenecks
* Short-term inflationary expectations up marginally
* Rainfall distribution critical to inflation outlook
* Prospect of fall in inflation hinge on food price ease
GROWTH
* Econ growth prospects have improved since Apr
* Monsoon current year better vs last year
* See pick-up in rural demand if monsoon on expected lines
* Rural demand rise to give more momentum to industry
* GDP projection reflects progress of monsoon so far
* GDP projection raised on better industry, services growth
* Comanpies' profits, sales reflect strength of econ recovery
* Investment intentions translating into action across sectors
* Rise in fund mobilisation also reflect growth momentum
* Domestic drivers of growth robust
GLOBAL
* Global commodity prices showing signs of softening last few weeks
* More fall in commodity price may cut fuel price hike impact
* Risk of global recovery faltering up since Apr policy
* Potential slowdown in FX flows significant risk to growth
* Fall in FX flows may constrain domestic investment
* Advanced economies policy likely accommodative for extended time
* Wide current acct gap may absorb large FX flows
* Export growth picked up despite Euro debt crisis
* Recent data shows slowdown in global growth momentum
* Concerns of deflation have re-emerged in some advanced economies
* See global inflation pressure subdued next few months
