(More on this issue) Financial and Money Market Developments We addressed the issue of excess liquidity which could have fuelled inflationary pressures by a judicious combination of two measures. First, we raised the Cash Reserve Ratio from 6.0 to 7.0 per cent in February 2011 and increased the minimum daily cash ratio from 4.5 per cent to 5.0 per cent.
On the other hand, portfolio allocation behaviour has tended to normalise over the past year following the exceptionally strong preference for liquidity observed during the period of heightened economic and financial uncertainty between 2001 and mid-2003.