Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

RBI may opt for CRR cut in monetary review on Tuesday: experts

Dec 18 2012, 09:55 IST
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Moderating inflation has raised hopes of rate cut by the Reserve Bank in mid-quarter review of monetary policy tomorrow, but experts believe that it is more likely to cut the Cash Reserve Ratio for banks. (Reuters) Moderating inflation has raised hopes of rate cut by the Reserve Bank in mid-quarter review of monetary policy tomorrow, but experts believe that it is more likely to cut the Cash Reserve Ratio for banks. (Reuters)
SummaryModerating inflation has raised hopes of rate cut by Reserve Bank in mid-quarter review of monetary policy

will look at the monetary side.

Industry leaders have been demanding a cut in interest rate for long to prop growth and investment.

As the inflation is at its 10-month low, it is time for RBI to take measures to ensure that the interest rates are reduced irrespective of tools it may choose to use, Assocham president Rajkumar N Dhoot said.

On concerns of sticky inflation, the RBI had left key policy rates unchanged in its last quarterly review of the monetary policy in October but hinted at easing monetary policy further in the January-March quarter.

"As inflation eases further, there will be an opportunity for monetary policy to act in conjunction with fiscal and other measures to mitigate the growth risks and take the economy to a sustained higher growth trajectory," RBI Governor D Subbarao had said in October policy review.

However, investment bank Goldman Sachs expects the RBI to cut its key interest rate by 0.25 per cent in its policy review following moderation in inflation.

"With both growth and inflation surprising on the downside relative to the RBI's forecast, there is a reason for the central bank to move earlier than its previous guidance," it said.

Union Bank of India Chairman and Managing Director D Sarkar said, "I expect that there should be some reduction in policy rates. It will boost up the sentiment and economic sentiment."

There is expectation that repo rate or CRR could come down by about 25 basis points, he said.

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