Business Standard

50 bps rate cut likely in RBI policy review: Credit Suisse

In the mid-quarter monetary policy review on December 18, RBI kept key interest rates unchanged

Related News

The Reserve Bank is likely to cut key interest rates by 0.50%, to 7.5%, in the forthcoming review on easing inflationary pressures, says a research report.

Positive surprises in the recent WPI data -- both headline and core -- and likely ebbing of inflationary pressures may prompt the central bank to cut key interest rate in its next policy meet, it said.

"Following a break of nine months, we expect the Reserve Bank to cut the repo rate at its January 29 meeting, probably by 50 basis (0.5%) points to 7.5%," it said.

According to the report: "The move would be best described as a belated pat on the government's back following its September reform announcements."

Going forward, the repo rate is likely to drop to 6.75% by July 2013, as the core and headline WPI inflation is likely to drop below 4% and 6% respectively by mid-2013, Credit Suisse Research Analyst Robert Prior-Wandesforde said in the research note.

Retail inflation, based on consumer price index (CPI), remained close to double digits at 9.90% in November, while, the WPI inflation in November stood at 7.24%.

Though these levels are much above the Reserve Bank's comfort zone of 5-5.5%, inflation is showing some signs of easing in recent months.

"We doubt that a January cut requires inflation to drop further from here," the report said.

On October 30, had pointed out that "the baseline scenario suggests there is a reasonable likelihood of further easing in the January-March quarter of 2013".

In the mid-quarter monetary policy review on December 18, RBI kept key interest rates unchanged.

It left the short-term lending (repo) rate and the cash reserve ratio -- the amount of deposits banks have to park with RBI -- unchanged at 8% and 4.25%, respectively.

Read more on:   
|
|
|

50 bps rate cut likely in RBI policy review: Credit Suisse

In the mid-quarter monetary policy review on December 18, RBI kept key interest rates unchanged

The Reserve Bank is likely to cut key interest rates by 0.50%, to 7.5%, in the forthcoming monetary policy review on easing inflationary pressures, says a Credit Suisse research report.

The Reserve Bank is likely to cut key interest rates by 0.50%, to 7.5%, in the forthcoming review on easing inflationary pressures, says a research report.

Positive surprises in the recent WPI data -- both headline and core -- and likely ebbing of inflationary pressures may prompt the central bank to cut key interest rate in its next policy meet, it said.

"Following a break of nine months, we expect the Reserve Bank to cut the repo rate at its January 29 meeting, probably by 50 basis (0.5%) points to 7.5%," it said.

According to the report: "The move would be best described as a belated pat on the government's back following its September reform announcements."

Going forward, the repo rate is likely to drop to 6.75% by July 2013, as the core and headline WPI inflation is likely to drop below 4% and 6% respectively by mid-2013, Credit Suisse Research Analyst Robert Prior-Wandesforde said in the research note.

Retail inflation, based on consumer price index (CPI), remained close to double digits at 9.90% in November, while, the WPI inflation in November stood at 7.24%.

Though these levels are much above the Reserve Bank's comfort zone of 5-5.5%, inflation is showing some signs of easing in recent months.

"We doubt that a January cut requires inflation to drop further from here," the report said.

On October 30, had pointed out that "the baseline scenario suggests there is a reasonable likelihood of further easing in the January-March quarter of 2013".

In the mid-quarter monetary policy review on December 18, RBI kept key interest rates unchanged.

It left the short-term lending (repo) rate and the cash reserve ratio -- the amount of deposits banks have to park with RBI -- unchanged at 8% and 4.25%, respectively.

image

Read More

'RBI rate cut to boost SME, credit off take'

The move, according to cooperative banking leaders, would support small and medium industries and increase credit offtake

Recommended for you

Quick Links

More news from Finance Rss icon

Bandhan plans to open 20 branches

It plans to convert their fixed location offices in the state to bank branches

Keeping fingers crossed on bad loans: Jaitley

'At times, when you try to revive the economy, some indicators can always be patchy'

Jaitley says it again: It's time for rate cut

Reserve Bank of India is scheduled to announce its monetary policy on June 2

Back to Top