RBI likely to bring down rates again

The inflation for the weekended 13 December has come down to 6.61 per cent from 6.84 per cent, which was recorded last week. The inflation has been decreasing significantly and it may come down to the normal state probably by next fiscal.

Considering the fall in the inflation rate, the Reserve Bank of India may further change interest rates. As the RBI has been changing the fiscal measures in order to maintain the liquidity in India in order to check the global financial crisis impact on banking sector and economy.

The central bank could cut the short-term repo and reverse repo rates and the cash reserve ratio (CRR) by 50 basis points each, according to media reports. At present, the repo rate — the rate at which RBI lends short-term funds to banks — is at 6.5% while the reverse repo, or its short-term borrowing rate, is at 5%, the media reports quote.