India Inc for Repo Rate Cut by 50 bps - The New Indian Express

India Inc for Repo Rate Cut by 50 bps

Published: 31st March 2014 06:00 AM

Last Updated: 31st March 2014 01:20 AM

India Inc wants the RBI to cut the key interest rate in its upcoming monetary policy.

RBI raised rates thrice since last September and the central bank is scheduled to unveil its first bi-monthly monetary policy statement on  April 1.

The expectations of a reduction in repo rate, currently 8 per cent, gained momentum following  wholesale and retail inflation data in February. The annual rate of inflation, based on the monthly wholesale price index, stood at 4.68% in February. Retail inflation was at a 25-month low of 8.1% last month.

“We hope for a 50 bps cut in the repo rate as retail inflation has started receding,” said Chandrajit Banerjee, Director General, CII.

In its third-quarter review of monetary policy in January, the RBI raised the key repo rate by 0.25 per cent to 8 per cent in a bid to curb inflation.

“MSME (Micro, Small and Medium Enterprises) industry is hopeful that the RBI Governor will take cognisance of their ongoing plight and reduce repo rate by 25 bps,” said Saurabh Sanyal, Executive Director, PHD Chamber.

However, most economists polled by Ficci said the RBI would keep the rate unchanged.

According to CII, the RBI along with the Ministry of Finance should bolster financial savings by enhancing the attractiveness of inflation-indexed bonds through better marketing and effectively communicating the likely returns of this bond.

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