RBI monetary policy review: Second MPC meeting begins, may propose 0.25% rate cut
This will also be the first monetary policy review after demonetisation of old Rs 500 and Rs 1,000 currency notes following which banks witnessed surge in deposits.
New Delhi: Reserve Bank Governor Urjit Patel is likely to go again for a 0.25 percent interest rate cut at its two-day policy review that ends on Wednesday, with an aim to cushion the impact of demonetisation.
The six-member Monetary Policy Committee (MPC) began its 2-day deliberations on Tuesday.
This is the second meeting of the MPC headed by RBI Governor Urjit Patel after the first that happened in October, when it had cut the repo rate or short term lending rate by 0.25 percent to 6.25 percent.
RBI has reduced repo rate by 1.75 per cent since January 2015.
This will be the first monetary policy review after demonetisation of old Rs 500 and Rs 1,000 currency notes following which banks witnessed surge in deposits.
Bankers opined that with the increase in Market Stabilisation Scheme (MSS) ceiling to Rs 6 lakh crore from Rs 30,000 crore, RBI is unlikely to continue to apply the incremental cash reserve ratio.
In order to manage liquidity conditions, RBI on November 28 had asked banks to maintain an incremental CRR of 100 per cent on deposits accrued between September 16 and November 11, 2016.