CII expects 0.75% cut in interest rates by RBI this year

CII President Sumit Mazumder said the cut will happen in three tranches to revive investments and growth

With deflationary trend continuing, industry body CII is expecting the RBI to cut the key policy rates by 0.75 per cent in three tranches this year to revive investments and growth.

"I am expecting rate cut in June by a small 0.25 per cent. But this year, I believe we can see small small rate cuts to 0.75 per cent. It will happen in three tranches this year. This is my expectation because the Governor is doing things like that," newly appointed CII President Sumit Mazumder told PTI.

He said that "every time the Governor makes a big noise about no question of rate cut, he announced rate cuts".

With WPI inflation winding down to record low of (-) 2.33 per cent in March, industry chamber hac pitched for rate cut to revive consumer confidence and boost investments.

In the monetary policy review on April 5, the RBI kept the key policy rate unchanged on fears of unseasonal rain impacting food prices, but nudged banks to lower lending rates while rejecting as "nonsense" their contention that cost of credit remains high.

Promising an "accommodative monetary policy", RBI Governor Raghuram Rajan however has indicated rate cuts going forward depending on favourable macro economic data, and whether banks pass on the benefits of two rate cuts so far this year.

The Reserve Bank has reduced repo rate by 0.5 per cent since January. The next review is due on June 2.