1. India Inc awaits rate cut boost in RBI’s monetary policy

India Inc awaits rate cut boost in RBI’s monetary policy

Will Governor Raghuram Rajan bite the bullet and slash key rates?

By: | Published: December 2, 2014 8:50 AM
Will Governor Raghuram Rajan bite the bullet and slash key rates? PTI

Financial markets and corporates are waiting with bated breath for a cut in the repo rate in the Reserve Bank’s monetary policy on Tuesday. PTI

Financial markets and corporates are waiting with bated breath for a cut in the repo rate in the Reserve Bank’s monetary policy on Tuesday. Will Governor Raghuram Rajan bite the bullet and slash key rates?

Tightening Phase: Between March 19, 2010 to April 16, 2012, the RBI hiked the Repo rate by 375 basis points to 8.50 per cent amid global financial crisis.

Easing Phase: The RBI slashed Repo rate by 125 bps between April 17, 2012 to July 15, 2013 when the financial situation improved.
Tightening Phase: Since July 16, 2013, the RBI hiked the Repo rate by 75 basis points to battle inflation.

Rajan’s stance: After taking over in September 2013, Rajan hiked the repo rate by 75 bps in three steps of 25 bps each, reinforcing the anti-inflation stance of the monetary policy.

62% chance of cut

A probability analysis of the Technical Advisory Committee recommendations and RBI’s policy action suggests a two-third chance of a 25-bps rate cut, says Anand Rathi Institutional Research.

China, Euro zone slash rates

China had last week announced a cut in the one-year benchmark lending rate of 40 basis points to 5.60%, the first reduction in more than two years.

European Central Bank has also slashed its benchmark rate by 10 basis points to 0.05% and the deposit rate to minus 0.2% in September.

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