RBI to release third quarterly review on 27 January
27 Dec 2008
In the backdrop of growing expectations of further easing of the monetary policy as inflation continues to retreat, the Reserve Bank on Friday said that it will unveil the third quarterly review of the monetary policy on 27 January.
It said in a statement, "D Subbarao, governor, Reserve Bank of India, will present the third quarter review of monetary policy for the year 2008-09 on Tuesday, 27 January, 2009." He will also meet the chief executives of major scheduled commercial banks the same day in Mumbai.
Inflation declined for the seventh week to 6.61 per cent for the week ended 13 December, creating more elbow room for the central bank to cut interest rates to spur the economy, which has been dragged down by the current global slowdown.
The bank had favoured this in the mid-year review tabled in Parliament.
The RBI has injected around Rs300,000 crore into the system by cutting bank rates and cash reserve ratios, encouraging banks to lower their prime lending and deposit rates.
Analysts said that with rapid decline in inflation, RBI now has more room to further loweer the rates to increase money supply in the economy and to make cheap credit available to borrowers to prevent the economic slowdown from gaining momentum.
Since August 2008, the RBI has reduced the cash reserve ratio by 350 basis points to shield banks in India from the intensifying global credit squueze. It has also brought the repo rate down by 250 basis points and reverse repo rate by 100 basis points.
Analysts feel the short-term repo and reverse repo rates and the cash reserve ratio (CRR) could be further brought down by 50 basis points each. The repo rate is currently at 6.5 per cent while the reverse repo, or its short-term borrowing rate, is at 5 per cent.
A cut of half a percentage point in CRR to 5 per cent would infuse another Rs20,000 crore into the banking system, whiole a futrther reduction in the policy rates, on the other hand, could directly lead to a further lowering interest rates for borrowers.
