NEWS & ADVICE : FIXED DEPOSITS
ING expects a further cut in policy rates
By Neelima Shankar
May 13, 2009
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Although the central bank has cut the key policy rates several times since October but there is a still scope for reducing short term lending and borrowing rates, said global financial services firm, ING.

While presenting its factsheet for April 2009, ING Investment Management said, "(The) 25 bps cut leaves door open for further rate cuts in future as inspite of incipient signs of recovery in real economy, it will take some time before cross border flows start picking up."

In the latest monetary policy review, the Reserve Bank of India (RBI) has slashed the key policy rates - repo and reverse repo - by 25 basis points to 4.75% and 3.25% respectively. Conversely the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) stood unchanged at 5% and 24% respectively.

"RBI will continue to maintain a soft monetary policy stance till it meets its objective of revival of growth," said the ING report.

Ever since financial crisis has hit the globe after the Lehman Brothers bankruptcy, RBI has reduced the repo rate by 425 basis points to 4.75% from 9% and the reverse repo has been brought down by 225 basis points to 3.25% from 6%.

Meanwhile ING expects that "inflation would continue to remain low for next few months."

Presently the wholesale price index (WPI) measured inflation rate in India stand at 0.7% for the week ended April 25th against 0.57% during the previous week.

 


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