Mumbai: Reserve Bank, which has started
exiting its easy money regime, might hike its Cash Reserve
Ratio and policy rates over the next 4-5 months, research firm
Macquarie said on Monday.
While the apex bank may hike the CRR by 0.5 percent
as early as next month, it may start upping the policy rates
(repo, reverse repo) by 1-1.5 percent by April, Macquarie
Securities, India & ASEAN Economics Head, Rajeev Malik told
reporters here.
"The hike in CRR is likely to happen in January by 50
basis points. For the entire FY11, we expect the policy rates
to go up by upto 1.5 percent," Malik said.
CRR is the percentage of amount banks are required to
park with the central bank. Repo and reverse repo rates
(policy rates) are the rates at which RBI lends and borrows
from banks.
As part of the policy exit, RBI restored the Statutory
Liquidity Ratio (SLR) in October to 25 percent, besides
tightening the provisioning norms for banks.
"These are sensible moves and should be seen in the
context of the emergency cuts that were announced late last
year but are not needed now," Malik said.
On the exit, the apex bank will be facing key
challenges like a fragile economic recovery, weak loan growth
and rising inflation, the research firm said.
PTI
First Published: Monday, December 14, 2009, 19:53