Experts are feeling that receding inflation has raised hope for a further cut in the short-term lending (repo) rate by at least 50 basis points. For the week ended November 1, inflation slipped to single digit of 8.98 per cent for the first time in the last five months. RBI has already reduced repo rate by 150 basis points to 7.5 per cent from earlier level of 9 per cent last month. Following reduction in the repo rate and other benchmark rates, several banks have reduced their benchmark lending rate by 75 basis points, leading to cheaper home, commercial, auto and personal loan.
At the same time, RBI has infused liquidity in the last one month to the tune of Rs 2,70,000 crore by cutting the Cash Reserve Ratio by 350 basis points and Statutory Liquidity Ratio by 100 basis points. Measures to inject liquidity as well as nudge interest rate lower in the near term is likely as inflation concerns rapidly recede, said Yes Bank Chief Economist Subhada Rao. Even corporate India has stepped up its demand for cut in lending rates as the inflation dipped to single digit at 8.98 per cent for the week ended November 1. In view of falling prices, Ficci has asked RBI for further cut in the interest rates and easing of credit policy to tackle slowdown in the industrial sector.
At the same time, RBI has infused liquidity in the last one month to the tune of Rs 2,70,000 crore by cutting the Cash Reserve Ratio by 350 basis points and Statutory Liquidity Ratio by 100 basis points. Measures to inject liquidity as well as nudge interest rate lower in the near term is likely as inflation concerns rapidly recede, said Yes Bank Chief Economist Subhada Rao. Even corporate India has stepped up its demand for cut in lending rates as the inflation dipped to single digit at 8.98 per cent for the week ended November 1. In view of falling prices, Ficci has asked RBI for further cut in the interest rates and easing of credit policy to tackle slowdown in the industrial sector.
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