CRR seen unchanged; 25 bps repo cut likely: CNBC-TV18 Poll

An overwhelming 90% of the market expects a quarter repo cut while 40% expect a cash reserve ratio (CRR) cut, reports CNBC-TV18’s Gopika Gopakumar.

  Majority of bankers and economist polled by CNBC-TV18 say that RBI will cut repo rate by 25 basis points on June 18. However, the market is still divided over whether the RBI will move on CRR because only 40% expect RBI to cut CRR by 25 basis points or more while 60% expect RBI to retain CRR at the current 4.75%.

Does this mean banks will cut base rate and deposit rates?

 

Since January this year RBI has cut CRR by 125 basis points and repo by 50 basis points and the entire banking system has not been able to pass on this rate cut. This time, too, the market is divided over the possibility of a base rate cut. 50% expect banks to pass on this policy transmission by cutting lending and deposit rates.   However the other 50% is not sure or do not expect RBI to cut or banks to cut lending and deposit rates. But if there is a CRR cut, chances could be different because majority expects banks to cut lending and deposit rates if RBI moves on CRR.

What could be the tone of RBI on the June 18 policy?

 

That’s kind of crucial because majority expect RBI to retain that April policy tone where RBI will be more balanced between inflation and growth. Only 40% expect RBI to be more dovish and probably hint at a possible rate cut going forward. But in terms of growth, clearly, the market is expecting RBI to revise growth forecasts but not in this policy, the revision could happen in the next policy which will happen in July.   The market is going ahead with a lower growth forecast but clearly not expecting RBI to revise it anytime in this policy.