RBI may hike reverse repo rate
Bankers and bond-dealers expect a 0.25 per cent hike in reverse repo rate in the quarterly review of monetary policy by Reserve Bank of India on Tuesday, although they see no change in lending rates.
By PTI |
KOLKATA/NEW DELHI: Bankers and bond-dealers expect a 0.25 per cent hike in reverse repo rate in the quarterly review of monetary policy by Reserve Bank of India on Tuesday, although they see no change in lending rates.
"Reverse repo rate is expected to be hiked by 25 basis points," State Bank of India managing director T S Bhattacharya said in Kolkata.
Even if there was a possibility of reverse repo rate hike, he said it may not trigger a hike in lending rates by banks like SBI.
"Till last week, we were not expecting any hike in reverse repo rate. But now the situation is fluid. We can't say anything," a senior PNB official said.
Chairman of Delhi-based Oriental Bank of Commerce, K N Prithviraj, also expects no major change in RBI stance. "I don't think so (hike in reverse repo rate). The current position may continue for some more time."
A bond-dealer said there was wide-spread speculation in the market that reverse repo rate may be hiked considering the recent movements in the yields of government securities.
RBI had hiked reverse repo rate by 0.25 per cent to 5 per cent in April but kept the benchmark Bank Rate untouched at 6 per cent to ensure that lending rates remain stable and growth in economy is not hindered.
The yield on benchmark 10-year G-Sec is still ruling at over 7.1 per cent. Inflation rate, which is a major mover of bond yields, had gone up marginally to 4.14 per cent during the week ended July 9.
Though bankers are not sure of the short term movements in the interest rate, they expect the rates to firm up in the medium term. PTI BSM PKS RR MSG MSG 07251736 DEL
"Reverse repo rate is expected to be hiked by 25 basis points," State Bank of India managing director T S Bhattacharya said in Kolkata.
Even if there was a possibility of reverse repo rate hike, he said it may not trigger a hike in lending rates by banks like SBI.
"Till last week, we were not expecting any hike in reverse repo rate. But now the situation is fluid. We can't say anything," a senior PNB official said.
Chairman of Delhi-based Oriental Bank of Commerce, K N Prithviraj, also expects no major change in RBI stance. "I don't think so (hike in reverse repo rate). The current position may continue for some more time."
A bond-dealer said there was wide-spread speculation in the market that reverse repo rate may be hiked considering the recent movements in the yields of government securities.
ADVERTISEMENT
RBI had hiked reverse repo rate by 0.25 per cent to 5 per cent in April but kept the benchmark Bank Rate untouched at 6 per cent to ensure that lending rates remain stable and growth in economy is not hindered.
The yield on benchmark 10-year G-Sec is still ruling at over 7.1 per cent. Inflation rate, which is a major mover of bond yields, had gone up marginally to 4.14 per cent during the week ended July 9.
Though bankers are not sure of the short term movements in the interest rate, they expect the rates to firm up in the medium term. PTI BSM PKS RR MSG MSG 07251736 DEL
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
