RBS survey sees RBI cutting lending rate by 0.25% on Friday

The Reserve Bank is likely to reduce the short-term lending rate by 0.25 percentage points in its monetary policy on Friday, as per a survey conducted by RBS.

"More than 80% of the respondents expect at least 25 basis points (0.25%) cut in the repo rate in the upcoming policy," RBS India managing director and head of markets Gyan Harlalka told reporters here.

He also said some participants even expect a 0.50% reduction in the repo rate in the annual policy and expect the easing cycle to continue in the current year.

On a possible reduction in the cash reserve ratio (CRR), the survey pointed out that market participants are evenly split between 25 bps cut in CRR and no cut. However, it noted that CRR is likely to be reduced by 25 basis points by December.

On the rupee, the survey said the domestic currency is likely to trade at 53.50 to the dollar by December.

"More than 70% of our respondents believe that the rupee will trade in the range of 52-55 to the dollar till December," the survey said.

On the 10-year G-sec, the survey said the market expects the benchmark bonds to trade between 6.65 and 8% by December with the average at 7.37%.