RBI likely to leave rates unchanged
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RBI likely to leave rates unchanged
RBI likely to leave rates unchanged

Mumbai: Majority of participants in the money market expect that the Reserve Bank of India will not make any rate changes or ease liquidity in its forthcoming monetary policy review on January 24. However, most participants expect some kind of an easing either in the form of a cut in cash reserve ratio or repo rates by end-March.

"We believe there is no compelling case to ease monetary policy this time around. Moreover, we do not expect a cut in the cash reserve ratio (CRR) this time to ease liquidity constraints, which would be addressed through open market operations. However, we have moved forward our call for rate and CRR cuts to Q2 from H2 given the weaker global and domestic growth outlook," said Leif Lybecker Eskesen, HSBC's chief economist for India and Asean.

However, even without a rate cut lending rates are seeing downward pressure. Outstanding bank loans as on end December 2011 are only 10% higher than end March 2011 levels. A year back for the same period bank credit growth was as high as 16%. Lenders say that the industry is set to miss the 18% credit growth target set by RBI.
Posted On : 21 Jan 12
RBI likely to leave rates unchanged
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