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Majority of the 109 respondents from industry believe that the Reserve Bank of India will cut key policy rates by at least 25 basis points on Tuesday, according to a survey by Royal Bank of Scotland (RBS).
The RBI will announce its third quarter monetary policy review on January 29.
Last week, RBI Governor D. Subbarao said that although inflation has come down, it is still high.
“The market is overwhelmingly poised for a rate cut, with more than 80 per cent of the 109 respondents expecting a 25-50 basis points cut in the repo and reverse repo rates ,” RBS said in its 15{+t}{+h} Survey on RBI’s quarterly policy review.
The survey was responded to by over 60 corporate clients of the Netherlands-headquartered foreign bank and by over 40 respondents from banks, mutual funds and insurance companies.
Majority of the respondents also believe that the central bank might cut policy rates by another 25 basis points before March 2013 and do an encore before December 2013.
According to median responses on expectations, market participants do not think that the RBI will touch the cash reserve ratio (the slice of deposits that banks keep with the central bank) in the forthcoming review.
However, there is a view that the CRR, which is at 4.25 per cent of deposits now, will be eased to at least 4 per cent by December 2013.
>satyanarayan.iyer@thehindu.co.in
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