Zee Media Bureau
New Delhi: Reserve Bank is expected to leave the repo rate unchanged during its annual monetary policy on Tuesday due to increased food prices after unseasonable rains in various parts of the country.
However, RBI may indicate a rate cut in future after some improvement on the price front.
RBI had lowered its policy rate by 25 basis points to 7.5 percent on March 4, after a similar cut on January 15, on the back of softening inflation and the government's commitment to continue with the fiscal consolidation programme. Both the rate cuts were announced outside RBI's regular policy review.
The CRR has been kept at 4 percent since 2013, while RBI had brought down SLR by 50 bps in February 2015.
The unseasonal rainfall in recent weeks across the northern and central regions of the country have sparked expectations that the RBI might wait till the full impact of the weather disturbance becomes evident and keep the key policy rates unchanged at the forthcoming review on April 7.
The rainfall has had an adverse impact on key Rabi (winter) crops such as wheat, oilseeds and pulses. As per an Assocham study, the damage could be at least 25-30 percent to the crop yields.
Bank credit grew 9.5 percent in the fortnight ended March 20 -- the lowest growth in last two decades.
CRR, the portion of total deposit parked with the RBI, currently stands at 4 percent.
With PTI Inputs
