Tuesday, 6 December 2016

RBI likely to cut rates by 25 bps on Wednesday

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All eyes are on the Reserve Bank’s policy meeting on December 7. Almost a month after announcing its demonetisation move, the central bank will have its bi-monthly policy meet when the market is expecting a cut. Economists and bankers are expecting atleast a 25 basis points rate cut. The respondents also expect a partial roll back of 100 percent cash reserve ratio (CRR) hike that was due to be reviewed by RBI on December 9. CRR limit is likely to be maintained at the 4 percent level. 

Almost 70 percent of the people are expecting a 50 bps rate cut by March 2017. Another 75 percent believe that the RBI will lower its gross value added (GVA) guidance to 7-7.5 percent from 7.6 percent due to demonetisation. As far as inflation is concerned, respondents are expecting it to remain unchanged at 5 percent for March 2017, the poll reveals. No change in liquidity is expected in this meet.

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