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No hurry to cut Bank Rate: Jalan

Our Bureau

NEW DELHI, March 15

THE Reserve Bank of India is in no hurry to reduce the Bank Rate although it will continue to maintain the soft interest rate bias, the RBI Governor, Dr Bimal Jalan, indicated here on Friday.

Replying to queries by newspersons on the Bank Rate issue on the sidelines of a conference here, Dr Jalan said: "We are not in a hurry. (However), soft interest rate bias will be maintained.'' The Central Bank Governor declined to elaborate further on what he considered as "soft'' interest rate.

Last year, the Reserve Bank had reduced the Bank Rate thrice, slashing it finally to 6.5 per cent. Alongside, it had also cut the repo auction rate by 0.5 percentage points to six per cent.

This year too, speculation on the RBI reducing the Bank Rate further has been on following the Finance Minister, Mr Yashwant Sinha's announcement on yet another reduction of 0.5 percentage points in the small savings interest rate while presenting the Budget for 2002-03.

"We will think about it. We are always thinking about these things,'' is all that Dr Jalan added on persistent queries by newspersons as to whether the issue of Bank Rate cut would be taken up by the RBI during the scheduled unveiling of the credit policy in April this year.

Ducking further questions, the RBI Governor also refused to comment on whether the current high fiscal deficit and borrowing target were not favourable for the rate cut, although he hastened to add that both "liquidity and interest rate conditions are favourable.''

On the Government's market borrowings, Dr Jalan noted that he saw "no problem in the borrowings just now.''

Credit policy on April 29: The Reserve Bank of India said on Friday that it would announce its monetary and credit policy for the next financial year on April 29 when it meets with Chief Executives of major commercial banks. The financial year begins on April 1.

The financial markets will be waiting to see if the RBI will continue with its aggressive easy interest rate policy or whether it will apply the brakes, given the bottoming out of rates in the US.

Bankers and analysts, however, are expecting the RBI to cut the cash reserve ratio to three per cent from 5.5 per cent at the April meeting, but they remain divided on whether it will keep the Bank Rate at 6.5 per cent.

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