Thursday, July 14 2005 15:30 Hrs (IST) - World Time -

Chennai: In the wake of rising global oil prices, the Reserve Bank of India Governor Y V Reddy today (July 14, 2005) said the global economic uncertainities have increased than what it had estimated, but the Central Bank would stick to the "basic projections" till the review of the monetary policy.

"As far as the outlook on the economy is concerned, a formal response will come during the monetary policy review (later this month). As of now, we are sticking to the basic projections, but the global uncertainities have certainly increased than what we estimated," Reddy told reporters, after the RBI's Central Board of Directors meeting in Chennai.

He said RBI was analysing the situation at this stage and hoped to come out with the update on the economy and policy at the quarterly review at the end of this month.

Reddy said the financial markets were "by and large" stable in the country and this was "good news".

"All the markets are reasonably stable," he said.

Asked about the impact of the monsoon on the economy, Reddy said there was nothing to show that there would not be a normal monsoon.

With respect to money markets, Reddy said RBI was taking all steps to ensure the stability of the markets. "For liquidity management, the size of MSS (market stabilisation scheme) and the size of LAF (liquidity adjustment facility) have to be consistent with the liquidity management that is appropriate to maintain stability. Therefore you would find that the emphasis is on stability," he said.

Reddy said the results of RBI's efforts to maintain stability was there "for everyone to see."

RBI Board Meeting comes ahead of the quarterly review of credit and monetary policy, which is slated for July 26.

The meeting, which was chaired by Reddy, was attended by Deputy Governors -- Rakesh Mohan, V Leeladhar, Shyamala Gopinath -- and other directors including Y H Malegam, Infosys' Chief Mentor N Narayana Murthy, Prof Mihir Rakshit, K Madhav Rao, Dr Amrita Patel and D S Brar.