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Asked by : nimesh marfatia, MBA/PGDM student, Europe Asia Business School
Industry : Equity Research/Analytics
Functional Area : Equities
Keywords : rbi rates
Activity: Question posted: 07 27 2009 18:16:21 +0000, 2 answers, 224 views, last activity 07 06 2010 20:18:08 +0000
 
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Shd RBI cut rates or should it keep it Unchanged?

 
  Answer modified by     Esha Johar, Risk Analyst, Irevna  | 07 28 2009 08:15:53 +0000
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I think the government should keep it untouched. Any upturn in the growth momentum is unlikely in view of the projected contraction in global demand during 2009. It will projected the wholesale price index based inflation at around 4 percent by next year.


Given the cost plus pricing structure, banks have been slow in reducing their lending rates citing high cost of deposits. The current deposit and lending rates are higher than in 2004-07, although the policy rates are now lower… There is room for downward adjustment in deposit and lending rates,


There are uncertainties surrounding the financial strength of banks around the world. Further, the regulatory and supervisory policies at national and international levels are under review. In view of this, it is considered advisable, for the time being, to continue with the current policy and procedures governing the presence of foreign banks in India

  Answered by     Alok Routray, PGPM 2010 Batch  | 07 27 2009 20:25:02 +0000
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RBI should keep all the rates unchanged becoz we will face a inflationary trend at current prices in a couple of months and it will continue to March 2010. Currently the growth rate of broad money (M3) is 20% yoy which is substantial enough to cushion the inflationary trend to come.  

 
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