Difficult to predict timing, pace of rate cuts: RBI
MUMBAI |
MUMBAI (Reuters) – Reserve Bank of India Governor Duvvuri Subbarao said it would be difficult to predict the timing, pace and magnitude of any interest rate cuts.
The RBI will be very circumspect about how rate cuts should roll out when they start, he said, adding the central bank would also have to look at the fiscal deficit before cutting rates.
The bank will look at how Tuesday’s cut in the cash reserve ratio (CRR) rolls out before doing more open market operations, he said.
The RBI cut the CRR, the share of deposits banks must hold with the central bank, by 50 basis points to 5.50 percent to ease tight liquidity, signaling a policy shift towards reviving growth after nearly two years of fighting inflation.
With core inflation still stubbornly high, the RBI, as expected, left its policy repo rate unchanged at 8.50 percent in its second consecutive review.
(Reporting by Mumbai Treasury Team; Editing by Rajesh Pandathil and Ted Kerr)
Article source: http://feeds.reuters.com/~r/reuters/INbusinessNews/~3/Ysc9nbq2CBE/rbi-ratecuts-idINDEE80N09020120124
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