<b>Credit Policy Review:</b>Liquidity to be maintained

 He said GDP growth forecast had been retained in the range of 7.5 to 8% during 2006-07 as projected in the annual policy statement, barring domestic or external shocks.

 Reddy said while domestic developments would continue to dominate the economy, global factors would tend to gain more attention now than before.

 He also said the Reserve Bank would continue with its policy of active demand management of liquidity through open market operations (OMO) including MSS, LAF and cash reserve ratio (CRR), and using all the policy instruments at its disposal flexibly, as and when the situation warrants.

 Reddy said the overall stance of the monetary policy would be to:

 1. Ensure a monetary and interest rate environment that enables continuation of the growth momentum while emphasising price stability with a view to anchoring inflation expectations.
2. To reinforce the focus on credit quality and financial market conditions to support export and investment demand in the economy for maintaining macroeconomic and, in particular, financial stability.
3. To consider measures as appropriate to the evolving global and domestic circumstances impinging on inflation expectations and the growth momentum.