RBI likely to cut repo rate by 25 bps, says Icra
"Following the recent easing in headline wholesale inflation and core inflation, Icra expects the RBI to decrease the repo rate by 25 bps in the policy review on Tuesday," Icra said in a report.
As per the rating agency, the space available for the RBI is likely to be limited to a total of 50 bps during the fourth quarter of FY13 and a further of 50 bps during the first half of the next fiscal.
There is less possibility of a reduction in the CRR (cash reserve ratio) on January 29, said the report.
"The likelihood of a cut in the CRR on Tuesday is low" as utilisation under the LAF corridor is expected to remain substantial in the fourth quarter. Any spike in liquidity deficit is likely to be moderated through OMOs, it said.
On the slowing deposit growth, the report said it would be in the range 12.5-14 per cent in FY13.
"Even as banks find it difficult to raise retail deposits, the fall in issuance of certificates of deposit and bulk deposit mobilisation following the Finance Ministry's recent instruction to public sector banks on containing their bulk deposits will further put pressure on deposit mobilisation during FY13. Overall, we expect deposits to expand by around 12.5-14 per cent in FY13."
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