'RBI policy on expected lines, may cut rates in future' | india | Hindustan Times
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'RBI policy on expected lines, may cut rates in future'

india Updated: Jan 27, 2009 13:41 IST
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Stating the Reserve Bank's credit policy to be "on expected lines", bankers on Tuesday said the RBI could cut key policy rates and ratios in the months to come with demand for credit picking up and inflation remaining subdued.

"Keeping the interest rates unchanged in the third quarterly review of the monetary policy is on expected lines, but rate cuts, going forward, cannot be ruled out as inflation is easing," said Oriental Bank of Commerce (OBC) Executive Director S C Sinha.

Expressing a similar view, Punjab National Bank Chief General Manager Arun Kaul said, "As RBI has changed policy rates without waiting for the credit policy, if need be similar actions could be anticipated in the weeks to come."

The RBI in its third quarterly review of the credit policy announced today kept key policy rates and reserve ratios unchanged, while lowered the GDP forecast to 7 per cent from 7.5 to 8 per cent earlier.

According to Bank of Baroda Chief Economist Rupa Rege Nisture, the RBI had already cut rates substantially and banks have responded to the extent possible.

In the present slowdown, fiscal measures are more relevant to address demand management rather than monetary policy, she said, adding interest rate cuts will have only a limited role in boosting demand.

However, HDFC Bank Chief economist Abheek Barua said, "I am a little disappointed because I was expecting a cut in policy rate."

At the same time, the RBI is clear that it will respond to any adverse development and so more cuts outside the policy are likely, Barua added.