RBI set to increase repo and reverse repo rate??

By | March 3, 2010

The Reserve Bank of India is set to hike its short-term interest rates by April as a step towards coming out from the easy money era. This was stated by Deutsche bank.

Pratik Gupta, head of equities, Deutsche Bank, said “Our assessment is that the RBI will hike the repo, reverse repo rates by April”.

In January, the RBI increased its cash reserve ratio by 0.75% to 5.75% to remove about Rs 36,000 crore (Rs 360 billion) additional money from the system.

The apex bank is likely to clarify its yearly monetary policy for the financial year 2010-11 on 20th April.

Stating on the probable trend in the capital market in 2010, Deutsche Equities’ Head of Research, Abhay Laijawala said that the bank has predicted that the Sensex will reach 22,000 mark by the end of 2010.

He said, “We have an overwhelmingly positive outlook and believe that the consumption plays such as autos, metals, paints and private sector banks as well as infrastructure and software will perform well during the year”.

Due to economic recovery, foreign investments in the local market are set to increase in the forthcoming months. Moreover  investments in the infrastructure section are set to get better, thus helping the long-term growth, he said.

However it could lead to hike in the interest rates on personal loans.

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