RBI to cut repo rates first time in nine months

The Reserve Bank of India (RBI) is expected to cut key rate by 25 basis points in its monetary policy review next week, responding government efforts regarding economic reforms.

Announcing its long awaited interest rates cut marks first time in nine months, RBI in confidence appreciate that the government is finally hard in bitter to push economy.

However, there would be no change in cash reserve ratio (CRR), as per media information.

After the RBI announcement to cut interest rates on January 29 as inflation has eased, much more expectations are overwhelmed among bankers because expected that lower their rates to some extent to pass benefit to customers.

The government action over fuels prices have raised government finances, reduced the need for it to borrow more which ultimately improved international situation reducing pressure on the rupee and take inflation at right direction.

“The RBI has also been taking steps to ensure that liquidity is made available in the system. Wholesale term deposit costs for banks have also eased in the last few months,” ICICI Bank MD and CEO Chanda Kochhar told reporters.

Last month’s mid-quarter monetary policy review there had no change in interest rates. Now the third quarter review will be unveiled on January 29, seeking some steps of inflation easing in recent months which is at 7% moderate level.

As per reports, wholesale price inflation smashed to a three-year low over 7 percent in December, while Indian government bonds is around 7.8 % in anticipation of overnight repo rate at 8% .

At present, rupee is traded at 53.68 against the dollar and now eyes are on RBI next week decision which would show that how RBI would interpret the wholesale price index (WPI) and consumer price index numbers.

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