As we head into RBI’s third quarter review of the 2011-12 monetary policy, the question foremost on our minds is the seeming reluctance to reverse the policy stance right away. In particular, given the persisting deficit system liquidity, why not cut CRR by 50-odd points and infuse liquidity through a more stable process than open market operations (OMOs)? How should we read RBI’s thinking on this?...........
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