RBI may keep interest rates unchanged in mid- quarter monetary policy
By Vaibhav Aggarwal
Dec 14, 2012
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The monetary regulator, Reserve Bank of India, is expected to keep key policy rates unchanged in the upcoming monetary policy review, which is scheduled to be out on Dec 18. This is suggested by the results of a poll carried out by Reuters. Further, the report shows a split between respondents over whether RBI will reduce cash reserve ratio (CRR) for the banks or not.

Previously, RBI had kept the rates unchanged since a 50 bps reduction in its policy review released in April. There are also speculations that the rate cut may get delayed till the policy review of the first quarter of 2013.       

The report shows that out of a total of 41 analysts surveyed, 37 believe that RBI will not increase or decrease its key policy rates. It will remain same at its existing level of 8 percent in December also. The poll also suggests that the respondents were equally divided on whether there will be a reduction in cash reserve ratio (CRR) or not. At present, it is at its lowest level in 46 years (since 1976) at 4.25 percent. Cash reserve ratio is a tool used by RBI to increase liquidity in the system and to encourage banks to lower their lending rates.

On the matter, HDFC Bank's chief economist, Mr. Abheek Barua said, "Given the fact that growth is in shambles, and inflation is sort of coming under control, I think they will reiterate the guidance this time and say a rate cut is likely in January."

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