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The fortnight’s burning question. Will we see a further slashing of interest rates by the RBI in the short term?

Print Edition: May 17, 2009

The fortnight’s burning question. Will we see a further slashing of interest rates by the RBI in the short term?

Yes. Amit Mitra, Secretary General, FICCI
There is an urgent need to support industrial growth at this stage and the RBI has done well by easing the monetary policy. Given the pace of monetary transmission, there is a need for further downward revision of policy rates. This is evident from the fact that a 425 basis points has translated into a reduction of lending rates on an average by 150 basis points.

Yes. Subir Gokarn, Chief Economist, Standard & Poor’s Asia Pacific
Given the sluggishness in the economy, there is a strong chance the RBI may cut key interest rates in the next few weeks. The repo rates are high and there is still pressure on the apex bank to cut rates. Besides, negative inflation in the economy leaves room for further rate cuts before this year’s Budget.

No. Ajit Ranade, Chief Economist, Aditya Birla Group
The fiscal and monetary expansion and consequent pick-up in economic activity is bound to enhance inflationary expectations. The problem is not so much with rates, as with access to credit. Banks have been choosy and cautious in lending, and hence a lot of potential borrowers are unable to get bank loans. The RBI may have to consider a hike in less than 12 months.

Manu Kaushik

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