The Reserve Bank is expected to cut policy rates up to 50 basis points shortly as inflation has been on way downward for past three consecutive weeks, bankers said. Due to the reduction in global commodity prices and crude oil, there is scope for reduction in benchmark interest rates, according to Director M V Nair, the Union Bank of India Chairman and Managing.Private sector lender HDFC Bank''s Treasury Head Sudhir Joshi said RBI has scope to slash rates.
The apex bank could cut short-term lending (repo) rate in between 25-50 basis points. Drop in inflation for the third straight week is giving rise to the expectation of rate cut by the RBI. The rate of price rise is at six-month low of 8.84 per cent for the week ended November 15 against 8.9 per cent in the previous week.
RBI has already shifted its focus from price management to growth as commodity and fuel prices have come down substantially in the last one-month. The decline in inflation may prompt RBI to cut policy rates or reserve ratios as demanded by bankers to enable them to cut interest rates to give a fillip to growth rates. Earlier, ICICI Bank CEO and MD K V Kamath had demanded that the RBI should ease money supply further to enable cut in interest rates by 200-300 basis points.
The apex bank could cut short-term lending (repo) rate in between 25-50 basis points. Drop in inflation for the third straight week is giving rise to the expectation of rate cut by the RBI. The rate of price rise is at six-month low of 8.84 per cent for the week ended November 15 against 8.9 per cent in the previous week.
RBI has already shifted its focus from price management to growth as commodity and fuel prices have come down substantially in the last one-month. The decline in inflation may prompt RBI to cut policy rates or reserve ratios as demanded by bankers to enable them to cut interest rates to give a fillip to growth rates. Earlier, ICICI Bank CEO and MD K V Kamath had demanded that the RBI should ease money supply further to enable cut in interest rates by 200-300 basis points.
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