RBI may pause, but not cut rates | india | Hindustan Times
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RBI may pause, but not cut rates

india Updated: Dec 13, 2011 02:29 IST
HT Correspondent
HT Correspondent
Hindustan Times
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All signs point to a pause button in the Reserve Bank of India's relentless pounding of the money market to control inflation, as an industrial slowdown worsened to a contraction in monthly data released on Monday. The RBI, which has raised its policy rates that influence commercial bank behaviour 13 times in 20 months, could at least take a breather.

On the other side, to ease availability of funds rather than its price, the central bank may cut by 0.5 percentage point to 5.5% the cash reserve ratio — the share of deposits that banks need to keep with RBI as cash.

The central bank has been raising the repo rate — the rate at which banks borrow from RBI — since March, 2010 in an attempt to rein in rising prices. Wholesale price-based inflation stood at 9.43% in figures for the week ended November 11, the latest available.

“RBI is unlikely to tinker with policy rates in its forthcoming monetary policy review even though there is pressure on the central bank to cut interest rates to boost investment,” DK Joshi, chief economist, Crisil told Hindustan Times.