RBI likely to cut rate by 0.5% by FY'13 end: Kotak Mahindra Bk

The Reserve Bank is likely to slash the lending rate by about 0.5 per cent by March and inflation is likely to be trend down to around 7 per cent levels by 2012-13 fiscal end, Kotak Mahindra Bank Managing Director Uday Kotak said.

"My view is that between now and March, we should see about 50 basis points drop in repo (rate). That will happen in two stages. My sense is one, either in December or January and one before March," Kotak told reporters on the sidelines of Delhi Economics Conclave here.

Repo is the rate at which RBI lends money to the banks, which is at 8 per cent currently.

The RBI will announce its mid-quarter monetary policy review on December 18. The third quarter review of monetary policy is slated for January 29.

The RBI has so far resisted a widespread call for the growth-propping rate cuts for some time now, citing the elevated inflation.

Kotak also expected that inflation may come down to 7 per cent by March.

"I would believe that by March, we should see inflation around 7 per cent on the wholesale. But consumer price index is still pretty high and we should see more positive moves on that," he said.

Inflation, as measured by the Wholesale Price Index (WPI), came down to 7.24 per cent in November from 9.46 per cent in the same month a year ago.

ALSO READ

SBI Mutual Fund launches gold accumulation facility

Prepaid debit cards: a weak link in bank security

IDBI Bank cuts retail deposit rates by 0.5 per cent

Rupee down 32 paise against dollar in early trade