11:06 AM
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Reserve Bank of India, India's central bank, may cut the repo-rate or
the interest that banks get for the funds parked with RBI, in its
monetary policy review meeting today, according to Martin Patrick, a
Kochi based economist.
“Given that headline inflation may get contained, the RBI may resort to rate cuts to the tune of 0.25% to 0.5%.” he said.
“Headline inflation may not exceed 7% for the short-term, that is at least for the next three months.” he added. “India's GDP growth rate is moderating, and if the rates are cut now, the measure would boost the industry.” Martin Patrick noted.
“If they do not cut the rates now, then they would be missing out on an opportunity.” he said.
India’s economic growth is likely to fall below 5.8% in 2012-13 while inflation is expected to moderate below 7.5%, according to Reserve Bank of India.
In its Macroeconomic and Monetary Developments Third Quarter Review 2012-13 released before the Third Quarter Monetary Policy Statement 2012-13 to be released on Tuesday, RBI said that suppressed inflation continues to pose a significant risk to the inflation in 2013-14. As some of the risks materialises, inflation path may turn sticky.
Various surveys show that business confidence remains subdued. Survey shows that forecasters outside the Reserve Bank anticipate growth to recover from 5.5 per cent in 2012-13 to 6.5 per cent in 2013-14. Average WPI inflation is expected to moderate from 7.5 per cent in 2012-13 to 7.0 per cent in 2013-14.
Meanwhile, India's industrial body ASSOCHAM made a strong demand for a big rate cut, stating 25 basis point reduction in REPO rate by the Reserve Bank of India (RBI) will only be a baby step which is quite inadequate to revive the growth momentum in the economy.
"It is time, the Reserve Bank of India went in for a bold move and slashed the REPO rate by at least 100 basis points. Only then, the prolonged high interest rate cycle will be broken and the growth would get some breathing space for revival. The 25 bps cut will only be a symbolic and would not make much of a difference excepting, maybe a short-lived rally in the stock market”, ASSOCHAM President Rajkumar N Dhoot said on the eve of the RBI coming out with a credit policy review today.
“Given that headline inflation may get contained, the RBI may resort to rate cuts to the tune of 0.25% to 0.5%.” he said.
“Headline inflation may not exceed 7% for the short-term, that is at least for the next three months.” he added. “India's GDP growth rate is moderating, and if the rates are cut now, the measure would boost the industry.” Martin Patrick noted.
“If they do not cut the rates now, then they would be missing out on an opportunity.” he said.
India’s economic growth is likely to fall below 5.8% in 2012-13 while inflation is expected to moderate below 7.5%, according to Reserve Bank of India.
In its Macroeconomic and Monetary Developments Third Quarter Review 2012-13 released before the Third Quarter Monetary Policy Statement 2012-13 to be released on Tuesday, RBI said that suppressed inflation continues to pose a significant risk to the inflation in 2013-14. As some of the risks materialises, inflation path may turn sticky.
Various surveys show that business confidence remains subdued. Survey shows that forecasters outside the Reserve Bank anticipate growth to recover from 5.5 per cent in 2012-13 to 6.5 per cent in 2013-14. Average WPI inflation is expected to moderate from 7.5 per cent in 2012-13 to 7.0 per cent in 2013-14.
Meanwhile, India's industrial body ASSOCHAM made a strong demand for a big rate cut, stating 25 basis point reduction in REPO rate by the Reserve Bank of India (RBI) will only be a baby step which is quite inadequate to revive the growth momentum in the economy.
"It is time, the Reserve Bank of India went in for a bold move and slashed the REPO rate by at least 100 basis points. Only then, the prolonged high interest rate cycle will be broken and the growth would get some breathing space for revival. The 25 bps cut will only be a symbolic and would not make much of a difference excepting, maybe a short-lived rally in the stock market”, ASSOCHAM President Rajkumar N Dhoot said on the eve of the RBI coming out with a credit policy review today.
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