Dr YV Reddy while raising repo and reverse repo rate by 25 basis points in his last credit policy in January 24 to rein in inflation, had assured that the steps will be relooked in course of time. We need to stabilise the inflationary expectations, said Dr Reddy adding that RBI has commitment to price and financial stability.
In the annual policy review we expect a hike of both reverse repo and repo rate by 25 basis ponits.We do not expect any cut in CRR in the comming policy review as this will further add to credit growth, said said Shuchita Mehta, economist, global markets, Standard Chartered Bank.
Centurion Bank of Punjabs managing director and chief executive officer Shailendra Bhandari said Given RBIs initiative to revisit the feasibility of capital account convertibility, we expect fair management of liquidity in the system. However, we do not see any evidence or reason for RBI to either increase the interest rates, nor do we expect any reduction in the cash reserve ratio (CRR) levels in the forthcoming credit policy.
Expressing similar views, FIMMDAs chief execuive officer (CEO) CES Azariah said With unwinding of market stabilisation scheme (MSS), we expect liquidity conditions in the system to improve. Hence, we do not expect any rate hikes or cut in the CRR levels by RBI in its credit policy. M Balachandran - CMD, Bank of India said there is some strain on liquidity at this point of time.
| A hike of both reverse repo and repo rate by 25 basis ponts is expected |
CRR cut is not expected
Fair management of liquidity expected
This time the pressure is much more intense primarily because of two reasons: One, the redemption of the India Millenium Deposits (IMD) in December 2005 for which $ 7 billion was squeezed off. The second is the high credit off-take in the country. I think the situation to ease by the start of the next financial year, he said.