Mumbai: Reserve Bank of India Governor Duvvuri Subbarao said on Tuesday it would be difficult to predict the timing, pace and magnitude of any interest rate cuts. The RBI will be very circumspect about how rate cuts should roll out when they start, he said, adding the central bank would also have to look at the fiscal deficit before cutting rates.
The bank will look at how Tuesday's cut in the cash reserve ratio (CRR) rolls out before doing more open market operations, he said.
The RBI cut the CRR, the share of deposits banks must hold with the central bank, by 50 basis points to 5.50 per cent to ease tight liquidity, signaling a policy shift towards reviving growth after nearly two years of fighting inflation.
With core inflation still stubbornly high, the RBI, as expected, left its policy repo rate unchanged at 8.50 per cent in its second consecutive review.
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