As a result, the economy is pushed into recession and unemployment rises sharply. This explanation essentially sees cycles as the result of a delayed monetary policy reaction function.
The movement to 3.0 per cent can be designed in three possible ways, viz., the traditional way of pre-announcing a time-table for reduction in the CRR; reducing CRR as and when opportunities arise as is being done in recent years; and as a one-time reduction from the existing level to 3.0 per cent under a package of measures.