Don't expect interest rates to come down steeply in 2013: Experts

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Don't expect interest to come down steeply in 2013: Experts
The Reserve Bank of India (RBI) might have been ready for a new-year surprise with rate cut of as much as 25 basis points in January month, but experts cautioned that excitement may be short-lived as it may not announce any further big cuts in rest of the year.

The central bank, while releasing its December monetary policy review, had said that inflation was easing gradually and it would step in to boost liquidity in the next year. The RBI had maintained the complete status-quo in 2012 in view of high inflation, except once when it had slashed the repo rate by 50 basis points in April month.

During 2012, in most of the policy reviews, RBI had lowered cash reserve ratio (CRR), Statutory Liquidity Ratio (SLR) and conducted OMOs to boost liquidity.

A media survey showed that most of the experts were expecting a 25 basis points rate cut in third-quarter review of the monetary policy on January 29 while they also said that 2013 may be indifferent to 2012 in terms of repo cut. This means, they were expecting a 50 basis point cut in 2013 also.

"I am expecting a 50 bps cut in 2013 and it will happen in the January-March period. After that RBI may pause," the report quoted A Prasanna, chief economist, ICICI Securities Primary Dealership as saying.

Experts said that there were indications of rise in inflation again during mid of 2013, amid price rise in fuel, coal and electricity.

Read more about: interest rates
Story first published: Wednesday, December 26, 2012, 10:30 [IST]
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