The Hindu Business Line : RBI likely to cut key rates in March: Experts

NEW DELHI: With the economy growing at a low pace of a little over 5 per cent in October-December period, the lowest in any quarter, the RBI may now cut key rates to provide stimulus to the sagging demand as it need not immediately worry about inflation , experts said.

There is widespread speculation that the RBI would slash benchmark rates by 50 basis points by the end of March as inflation is easing week after week.

For the week ended February 14, the inflation declined to 15-months low of 3.36 per cent.

“We expect the RBI to cut the reverse repo and repo rates by 50 basis points each before end-March,'' said Goldman Sachs economist Tushar Poddar. Echoing similar view, Crisil principal economist D K Joshi, the RBI could cut policy rates by 50 basis points in the near term. Short term lending (repo) rate currently stands at 5.5 per cent while short-term borrowing (reverse repo) rate is pegged at 4 per cent.

Nomura economist Sonal Varma said, the central bank might cut both the repo and reverse repo rates by 50 basis points any time between now and the end of March, and by a further 100 basis points by mid-2009. According to HDFC Bank economist Jyotinde r Kaur RBI might act pretty soon and slash policy rates by 50 basis points each. - PTI

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