In view of high inflation and deficient monsoon rainfall, the Reserve Bank may find it difficult to cut the key lending rate to boost the economy as is being demanded by the industry. Although bankers expect RBI to cut the Cash Reserve Ratio (CRR) by up to 0.50% in the monetary policy review on Tuesday, it would not be possible for the central bank to heed to India Inc’s demand as inflation, at over 7 per cent, is much above its comfort level. Moreover, uncertainty over monsoon is likely to put pressure on prices of essential commodities. On an average, rainfall deficiency across the country is 21% so far. RBI Governor D Subbarao will unveil the first quarter policy review and if his recent comments on inflation as well as fiscal and current account deficit numbers are any indication, it may turn out to be a non-event.
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