MUMBAI, Jan 30 (Reuters) - The Reserve Bank of India will keep liquidity in the deficit mode as long as it is fighting to control inflation, governor Duvvuri Subbarao said on Wednesday.
Subbarao was speaking to analysts a day after the third quarter review of the monetary policy.
The central bank’s stated stance is to keep the liquidity surplus or deficit in the banking system within plus/minus one percent of total deposits.
On Tuesday, the central bank cut its key repo rate for the first time in nine months by 25 basis points, and also unexpectedly lowered banks’ cash reserve ratio to 4 percent from 4.25 percent. (Reporting by Shamik Paul)