RBI Governor Dr. Y. Venugopal Reddy in the Mid-term Review of Annual Policy for the Year 2007-08 has hiked the CRR but kept the key rates unchanged. CRR is increased by 50 basis points to a rate of 7.5 percent.

CRR as known as Cash Reserve Ratio is simply meant as the amount of money, which banks are to keep with RBI.

The Central Bank has left the key rates unchanged, like Bank Rate at 6 percent Repo Rate at 7.75 percent and Reverse Repo rate at 6 percent.

Bank’s GDP growth forecast remains at 8.5 percent for the year 2007-08, while inflation at 5 percent in the same year.

RBI has given high priority for managing the inflows of capital. Bank’s Governor clearly identified the problems associated with external inflows on inflation.