The RBI is waiting for the impact of the recent (reform/policy related) statements to pan out before taking a call. The central bank is certainly leaning towards a move dovish stance and is willing to support growth. The CRR cut almost forces the lenders to change rates. Going forward for the rest of the year, about 50 – 75 basis points reduction in lending rates seems likely. But there would be variations across segments. –Abheek Barua, Chief Economist and Senior Vice President, HDFC Bank Listen here
The RBI maintains that they have been using the CRR as a liquidity management tool rather than a monetary policy tool. The status quo on rates with a reduction in CRR, in my opinion, would create confusion about the Monetary Policy stance, which is a bit negative for inflationary expectations. – Rupa Rege Nitsure, Chief Economist, Bank of Baroda Listen here
Central bank is still worried about the inflationary fall-out of the diesel price hike and will take some more time before softening stance on interest rates. Till the time liquidity is there, market is not bothered in any way about what is happening anywhere. The downside is now virtually capped. Good quality, high beta stocks will be in focus. Defensive stocks are relatively expensive and therefore the upside from now on could be limited. – Mehraboon Irani, Principal and Head (Private Client Group), Nirmal Bang Securities Listen here
The RBI is still very much concerned with the inflation and the problems in the euro-zone. Rupee, in the medium-term, can find bottom around 53, which is a best case scenario. I don’t think the banks will be aggressive in cutting rates. – Abhishek Goenka, India Forex Advisors. Listen here
RBI's clear focus is on inflation which has remained sticky at around 7.5 per cent. However, the hike in diesel price last week was a welcome move, as it will reduce the fiscal deficit. If rupee gets stronger, it will definitely help in reducing prices of many imported commodities, which can actually help in reducing the statutory inflation. This, in turn, would help RBI to ease rates going ahead. Credit uptick could happen in November on account of the telecom auctions. – Harihar Krishnamoorthy, Treasurer, FirstRand Bank (India) Listen here
We can get to see some amount of contraction in lending rates going forward. The CRR cut will help PSU banks to reduce their lending rates. The hike in diesel price and the rise in commodity prices will definitely affect the inflation numbers, which the central bank will be keenly watching before cutting key policy rates. The growth will remain under pressure if inflation stays above the comfort zone. – Vaibhav Sanghavi, Director (Equities), Ambit Capital Listen here
Inflation is still on the higher side, and is much above the central bank’s comfort zone. The RBI is more focused on balancing inflation and growth and has taken the right step by cutting the CRR. Since the festive season is around, credit demand and the overall activity is likely to pick up. The amount of liquidity in the system is quite comfortable – Naresh Takkar, MD & CEO, ICRA Listen here
The RBI seems to be too cautious. The situation warrants a 25 basis point (bps) repo rate cut and the investments are unlikely to pick up pace unless a repo rate cut happens. Banks are not likely to pass much benefit to the industrial sector. This will not boost the sentiment of India Inc to put things back on the drawing board. – S P Tulsian, CEO and Editor, Premium Investments Listen here
The Reserve Bank of India's tone was dovish today. Bankers are contemplating a reduction in lending rates that could translate into lower interest rates going ahead. Overall, this will have a positive effect. Inflation, however, is still a cause of concern. – Manish Sonthalia, Vice President & Fund Manager, Motilal Oswal AMC Listen here
This is a symbolic move by the RBI given that the government, too, moved ahead on the policy front. The central bank is trying to complement what the government did last week. The optimism was already there (ahead of the policy) in the markets. In the short-term, we expect some correction in the markets and have advised our clients to exit the banking space and re-enter at lower levels – Saday Sinha, Vice President (Equities), Kotak Securities Listen here
The policy was not in-line with our expectation, as we were expecting a rate cut of 25-50 basis points with no CRR cut. – Ambareesh Baliga, Chief Operating Officer, Way2Wealth Listen here
