RBI likely to keep interest rates unchanged: Moody`s

Last Updated: Thursday, July 23, 2009 - 21:08

New Delhi: The Reserve Bank is likely to
keep interest rates unchanged in its quarterly monetary policy as there is little pressure on the central bank to further take liquidity easing measures, according to Moody`s.
"The Reserve Bank of India is facing little—if
any—pressure...March quarter GDP numbers show that India’s
economy remained on a solid footing, and subsequent
high-frequency data such as industrial production point to a
brighter outlook," Moody`s economy.com said in a release.

It further said that at the upcoming quarterly meeting
on July 28, the apex bank is also likely to keep reserve
requirement ratio unchanged.

"The current relatively loose monetary policy setting
will complement the fiscal stimulus by ensuring sufficient
liquidity for expansionary projects that are expected to
gather steam later in the year. Monetary policy takes time to
filter through to the economy," Moody`s economy.com, the
research arm of Moody`s, said.

It added that as commercial banks had accepted deposits
at high fixed rates in the latter half of 2008, they had been
reluctant to immediately lower lending rates to mirror the
series of official rate cuts.

"However, as commercial banks gradually reprice these
deposits as their terms expire, lending rates are expected to
fall accordingly," it said.

Bureau Report



First Published: Thursday, July 23, 2009 - 21:08

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