Saturday, June 16, 2012
Will RBI cut the rates?
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Slower growth and high volatility, Reserve bank is expected to cut Repo and Reverse Repo rates by 25 basis points in its policy review on Monday, 18th June, 2012.
What are current rates?
Repo Rate - 8%
Reverse Repo Rate - 7%
RBI has room to support economic activity as industrial production growth remains weak and inflation is under sub 10% level.
The industrial production grew at just 0.1 per cent from a year ago in
April. Meanwhile, the wholesale price index based inflation rose to 7.55
per cent in May from a year ago because of higher food and fuel prices.
Bloomberg survey on Reserve Bank of India policy suggests all major economists predicting 25 basis points rate cut. Only Religare and Bank of Baroda economists are predicting 50 basis points, rest all either suggesting 25 basis points or no change.
It seems rate cut has become a necessity and Reserve Bank has no option but to adhere to above estimates. I hope some good days coming for consumer and corporate segments. However, RBI can surprise market with 50 basis points bold move or even make it remain as it is. All eyes on policy review on 18th June at 11 a.m.
This post was written by: Saumya Aggarwal
Saumya Aggarwal is a professional blogger, web designer and marketer. Follow him on Twitter
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