RBI may cut rates after vote-on-account

11 Feb 2009 , 10:26 AM

Given that the cost of credit needs to fall to boost confidence, the Reserve Bank of India may eventually cut interest rates. This could happen after the interim budget is approved, Suresh Tendulkar, Chairman of the Prime Minister’s Economic Advisory Council was quoted as saying. The RBI has cuts its key lending rate, the repo rate, by 350 basis points to 5.5% since October, but left rates unchanged at the last policy review urging commercial banks to pass on the benefits of its previous cuts. “Alleviating job losses should be the government’s priority. Demand for exports has gone down, so sectors like gems and jewellery, textiles etc need to be revived so that more jobs can be created,” Suresh Tendulkar said.