Fiscal, News

RBI may cut benchmark lending rate by 0.25% in May

rbi monetory and credit policy

RBI Governor D Subbarao will announce the Monetary Policy Statement for FY14 on May 3, 2013

The Reserve Bank may cut the benchmark short-term lending rate by about 0.25% in its annual monetary policy next month in the backdrop of declining inflation and the urgency to promote growth, say economists. 

“Right now, conditions should enable the RBI to cut the repo rate. We expect a cut of 25 basis points (or 0.25%) in its policy in May and may be by another 25 bps in the next review,” HDFC Bank Chief Economist  Barua said. 

RBI Governor D Subbarao will announce the Monetary Policy Statement 2013-14 on May 3, 2013. 

YES Bank Chief Economist Shubhada Rao said RBI may cut the repo rate or the short-term lending rate by about 0.25% in May as inflation has come down and there is a need to fuel economic growth. 

“Taking cue from inflation, we believe that RBI could take this time…To cut rate, particularly, the way we have seen inflation in the past coming down. Given the strong deceleration in growth, we think RBI may cut repo rate by 0.25% in May as well as may provide some liquidity easing,” Rao said. 

Wholesale prices (WPI), a measure of inflation, softened to 5.96% in March after an annual rise of 6.84% in February, the lowest rate since November 2011. 

“If you look at the incremental data WPI, IIP in the last two months, that data is in favour of the 25 basis points rate cut. We are expecting a cut in repo rate in May,” Anubhuti Sahay, Economist, Standard Chartered Bank said. 

Industry has been batting for a rate cut to tide over the problems concerning poor demand, low industrial output and subdued economic growth.

 The Index of Industrial Production (IIP), the key gauge to measure industrial activity, slumped to 0.6% in February from 4.3% a year ago because of poor performance in manufacturing coupled with contraction in power generation and mining output. India’s economic growth rate is estimated to slip to a decade’s low of 5% in 2012-13, pulled down by poor performance of manufacturing, agriculture and services sectors.

Get free important share market ideas on stocks & nifty tips chart setups, analysis for the upcoming session, and more by joining the below link: Stock Tips

Have you any questions/feedback about this article? Please leave your queries in the comment box for answers.

Disclaimer: The information provided on this website, including but not limited to stock, commodity, and forex trading tips, technical analysis, and research reports, is solely for educational and informational purposes. It should not be considered as financial advice or a recommendation to engage in any trading activity. Trading in stocks, commodities, and forex involves substantial risks, and you should carefully consider your financial situation and consult with a professional advisor before making any trading decisions. Moneymunch.com and its authors do not guarantee the accuracy, completeness, or reliability of the information provided, and shall not be held responsible for any losses or damages incurred as a result of using or relying on such information. Trading in the financial markets is subject to market risks, and past performance is not indicative of future results. By accessing and using this website, you acknowledge and agree to the terms of this disclaimer.

Previous ArticleNext Article
The Moneymunch editorial staff is a team of experienced financial writers and analysts with over a decade of experience in the financial markets. They have previously contributed to popular financial blogs and newspapers, and are passionate about providing accurate and up-to-date information to help both investors and traders make informed decisions. Trust the Moneymunch editorial staff to provide reliable and effective financial advice that can help you achieve your financial goals.

Write a Comment

Comment Policy: We love comments and appreciate the time that readers spend to share ideas and give feedback. However, all comments are manually moderated and those deemed to be spam or solely promotional will be deleted. Your email address will not be published. Required fields are marked *