The central bank also maintained the Cash Reserve Ratio steady at five per cent in its annual policy for 2005-06 unveiled in Mumbai.
The economic growth for 2005-06 was pegged at 7 per cent. The inflation rate for the current fiscal is estimated to be in the range of 5-5.5 per cent, RBI Governor Y V Reddy said while addressing the bankers.
Agricultural growth is likely to be three per cent and industry and services sectors are expected to continue the current growth momentum while absorbing the impact of oil prices.
The monetary policy would aim to provide liquidity for credit growth and support investments along with emphasis on price stability, Reddy said.
He said the focus would be on financial stability and stabilising inflationary expectations. On the repo rate, he said the fixed reverse repo rate would be raised by 0.25 per cent to five per cent.
The RBI, starting this financial year, would also conduct quarterly review in July and January. The mid-term review will be carried on October 25, he added.