RBI in 'wait and watch' mode on inflation, don't expect a rate cut now

Will RBI lower rates in the year? The answer is definitely yes, though timing may be uncertain.

The RBI policy has been on expected lines with no change being reckoned on the policy rates. However, the cut in SLR comes at a time when banks have been flushed with excess liquidity in the region of Rs 3.5-4 lakh crore in the last 2 months. Hence, it is not so much as providing them with a window to get more liquidity as much as helping them with their LCR requirements as it takes on the target of 100% by 2019.

Now credit policy has been linked inexorably with CPI inflation which has been moving downwards. Here the RBI’s