Bankers see 25 bps rate cut in May policy review

Posted By: Religare
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Bankers see 25 bps rate cut in May policy review
With an unexpected and steep fall in Wholesale Price Index (WPI) during the month of March, bankers are expecting a 25 basis point rate cut next month at RBI's monetary policy review on May 3, 2013.

WPI inflation fell to 40-month low at 5.96 per cent during March as compared to 6.84 per cent in the previous month.

A leading media report suggested quoting Deutsche Bank's official that "We think RBI will support an easing monetary policy bias in the next few months. Consequently, we expect the central bank to cut the repo rate by clips of 25 basis points in the next two policy meetings (May and June)."

While some economists said that a repo rate cut alone would not solve the purpose till CRR remains unchanged, some other economists said that RBI may refrain from rate cut in May as Current Account Deficit (CAD) and retail inflation remain high.

CAD came in at 6.7 per cent of GDP during December quarter while retail inflation has remained above the double-digit mark in March.

Read more about: repo rate
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