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RBI may up GDP projection, cut bank rate in credit policy
New Delhi, Nov 02: RBI is likely to revise upwards its GDP growth projection to at least 6.5 per cent and cut bank rate by 0.5 per cent in its busy season credit policy to be announced on November 03, financial market experts said.
New Delhi, Nov 02: RBI is likely to revise upwards its GDP growth projection to at least 6.5 per cent and cut bank rate by 0.5 per cent in its busy season credit policy to be announced on November 03, financial market experts said.
With good monsoon and revival in industry, economists said that the country was poised for over 6.5 per cent growth.
So, RBI may also scale up its GDP growth projection to this level from 6.0 per cent as spelt out before the monsoon in its slack season credit policy in April, they said. Research agencies have already revised their GDP target upwards. NCAER, CMIE and Crisil have pegged it at over 7.0 per cent, while ICRA estimated it at 6.5-6.8 per cent.
In order to ensure higher growth, experts said, RBI may cut bank rate further from the present 6.0 per cent. Banking secretary N S Sisodia feels that a softer interest regime helps stimulate economic growth and makes industry competitive.
SBI chairman A K Purwar also favoured stable interest rates with a soft bias.
"Bank rate may be reduced by 0.5 per cent, though it might not lead to substantial increase in credit flow," Institute of Economic Growth Director B B Bhattacharya said.
A senior official of Standard Chartered Bank also said that a 0.5 per cent reduction in the RBI's refinance rate was possible along with a reduction in cash reserve ratio and repo rate. Bureau Report
So, RBI may also scale up its GDP growth projection to this level from 6.0 per cent as spelt out before the monsoon in its slack season credit policy in April, they said. Research agencies have already revised their GDP target upwards. NCAER, CMIE and Crisil have pegged it at over 7.0 per cent, while ICRA estimated it at 6.5-6.8 per cent.
In order to ensure higher growth, experts said, RBI may cut bank rate further from the present 6.0 per cent. Banking secretary N S Sisodia feels that a softer interest regime helps stimulate economic growth and makes industry competitive.
SBI chairman A K Purwar also favoured stable interest rates with a soft bias.
"Bank rate may be reduced by 0.5 per cent, though it might not lead to substantial increase in credit flow," Institute of Economic Growth Director B B Bhattacharya said.
A senior official of Standard Chartered Bank also said that a 0.5 per cent reduction in the RBI's refinance rate was possible along with a reduction in cash reserve ratio and repo rate. Bureau Report