The Hindu : Business : RBI may raise reverse repo rate

Online edition of India's National Newspaper
Tuesday, Oct 25, 2005

Business

Business

RBI may raise reverse repo rate

Special Correspondent

`A 25 basis point rise could be absorbed'

NEW DELHI: The busy season credit policy to be unveiled on Tuesday may increase the reverse repo rate by 25 basis points, an Assocham Business Barometer (ABB) survey of leading bankers and treasury managers has said.

Over 80 per cent of the bankers and treasury officers polled by the survey agreed that the RBI may signal tightening of the monetary policy by scaling up the reverse repo rate by 25 basis points from the present five per cent.

Those polled said the central bank could take this step on the premise that a 25 basis point increase in the rate at which it borrows from the banks could be absorbed without much of a jerk to the economy.

As many as 60 per cent of respondents felt that if the RBI tinkers with the reverse repo rate, it may do the same with the repo rate and the Bank Rate as well.

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