Repo rate, CRR cuts may be restricted to 25bps each in FY13
ICRA has come out with its comment on RBI`s credit policy announced on April 17, 2012. As per the research, further Repo rate and CRR cuts are expected to be restricted to 25 bps each in FY13.
April 17, 2012 / 15:40 IST
ICRA has come out with its comment on RBI`s credit policy announced on April 17, 2012. As per the research, further Repo rate and CRR cuts are expected to be restricted to 25 bps each in FY13.
The RBI’s move to reduce the Repo rate by a higher-than-expected 50 basis points is likely aimed at shrinking the time lag with which Banks reduce their lending rates, in order to provide an early boost to investment and consumption sentiment. Based on the hawkish guidance provided by the RBI that the space for further reduction in policy rates is limited and the upside risks to inflation, we expect further Repo rate and CRR cuts to be restricted to 25 bps each in FY13. The increase in the limits under the Marginal Standing Facility would also improve the liquidity situation. Nevertheless, the magnitude of the Central Government’s borrowing programme suggests that substantial open market bond purchases would be necessary for credit growth to expand in line with the 17% projected by the RBI. The markets eagerly await the final guidelines on implementation of Basel III and Securitisation expected by end-April 2012.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
