For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

Bankers expect 50 bps rate cut this week: Report

By Religare
|
Bankers expect 50 bps rate cut this week: Report
The pressure upon Reserve Bank of India (RBI) continues to build up as some bankers now expect it to cut the key policy rates by 50 basis points on May 3 to lift growth in Asia's third largest economy.
 

Bankers said that sharp correction in global commodity prices, coupled with recent plunge in WPI has increased the scope for a sharper rate cut than the earlier consensus estimate of a 25-bp reduction.

"Downside surprise in headline and core inflation, and softer commodity price outlook have offered the Reserve Bank of India (RBI) greater headroom for monetary easing. We expect another 50-bp repo rate cut during this quarter. While a 25-bp cut on May 3 remains our baseline expectation, possibility of a front-loaded 50-bp cut has increased in recent weeks, reflecting softer inflation and commodity prices, and persistence of weak growth indicators," said Barclays Chief Economist Siddhartha Sanyal, as per the media report.

Moreover, expecting a 50 bps cut, bond yields touched the multi-year low of 7.73 per cent on Monday, before ending higher at 7.76 per cent due to profit booking.

Banks, however, also said that repo rate cut would not help much as for lending rates to come down, liquidity has to improve. For easing the liquidity, they said, RBI will have to either cut Cash Reserve Ratio (CRR) or increase the Open Market Operations (OMOs).

Read more about: repo rate
Company Search
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more