It might be difficult for the Central Bank to push economic growth by reducing repo rate any further as the inflation remained high in September. Though there are clear indications of further reduction in the interest rates to accelerate growth.
Mr. N S Venkatesh, General Manager (treasury) of IDBI Bank said that due to high inflation and trade deficit, the repo cut wasn't in the second quarter.
RBI might the reduce cash reserve ratio (the amount banks keep with RBI) rather than changing the repo rate, which is currently 8 per cent. Repo rate is the rate at which bank borrows from RBI.
However, RBI had cut CRR by 25 bps from 4.75% to 4.50% few days back and this led to the injection of Rs 17000 crore into the banking system.
The central bank will be reducing its repo rate in first quarter in 2013.