Repo rate cut given; CRR change doubtful: CNBC-TV18 Poll

The Reserve Bank will announce its mid-quarter policy tomorrow. Consumer Price Inflation has been in double digits for 3 months in a row, but core inflation has fallen sharply and this has sparked hopes that the RBI may find it possible to ease up on its it’s monetary stance. A CNBC-TV18 poll among bankers and economists shows expectations of a repo rate cut is really high, reports Gopika Gopakumar of CNBC-TV18.

The market is awaiting a rate cut from the RBI on March 19. That's the verdict of a CNBC-TV18 poll of bankers and economists who expect a 25 bps repo rate cut on Tuesday’s mid quarter review. The call for a rate cut is supported by the argument that market expects RBI to have a negative bias on year end GDP and inflation forecasts. Only 10 expect expect repo rate to remain unchanged.
However, a majority of 70 percent expect RBI to also leave cash reserve ratio unchanged at 4 percent. Only 30 percent expect CRR cut of 25 bps.
For the rest of the year, majority expect repo rate cuts of up to 75 bps including Tuesday's rate cut. But 10 percent expect a 100 bps repo rate cut spread over the year.
On CRR, majority of bankers and economists polled expect RBI to cut CRR by a minimum of 25 bps. Only 30 percent expect no change in CRR.
While 50 percent of the market expects RBI to sound cautiously optimistic, the remaining 50 percent expect RBI to sound more dovish than January policy.
There is a minority who is expecting RBI to cut the held to maturity ratio of lenders which is the ratio of g-sec banks must hold till maturity.