With the inflation sharply declining even below the Reserve Bank of India's (RBI) comfort levels, the central bank is likely to cut the repo, reverse repo rates "anytime from now" to support demand, bankers have said.
"A 0.5-1 per cent cut in the reverse repo rate could be expected anytime now following the sharp decline in inflation numbers. This would be needed to support the falling demand in different sectors owing to a global economic slow down," HDFC Bank's Deputy Head of Treasury, Ashish Parthasarathy told PTI here.
The Reserve Bank had revised its key rates several times in 2008 to balance the liquidity conditions in the system, besides to support the economic growth momentum.
It slashed the cash reserve ratio (CRR), the percentage of amount banks need to park with the central bank by 3.5 per cent to 5.5 per cent from nine per cent besides cutting the repo, reverse repo rates to 6.5 per cent and five per cent, respectively.
Echoing a similar view, Vijaya Bank's Executive Director, K C Kalia said the central bank is expected to reduce its key rates by 0.5-1 per cent in the near future in view of the slow down in different sectors.
"A one per cent cut in repo, reverse repo rates are likely with the inflation declining to 6.61 per cent. I expect this to happen in the near term," Kalia said.
