Millennium Post

Most don’t expect rate cut by RBI

A majority of India Inc have little expectations from RBI's second quarter monetary policy review on 30 October given the macro-fundamentals of the economy, with 53 per cent not forseeing any reduction in the policy rate, says a survey.

However, the RBS in a pre-policy client survey released on Thursday, observed the market is gearing towards a softening in the interest rates in the long-term, say beginning March.

The Reserve Bank will unveil its busy season credit policy next Tuesday, where it is widely expected that Governor Subbarao will leave all the key rates unchanged due to the persistently high inflation, which in August stood at 7.81 per cent. Many economists are also saying that it is too early for the government to expect anything dramatic on the interest rate regime despite the recent reform measures. But there is also a section in the industry and academia who call for some reciprocal measures from the Mint Road, at least symbolically which can go a long way in boosting the sentiment.

Currently, CRR is pegged at 4.50 percent, while repo is tied at 8 per cent, after the tweaking in the March-April period.

While half (50.9 per cent) the respondents don't expect any change in the CRR, around 49 per cent are looking at a 25-50 bps cut in the same on next Tuesday.
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