State Bank of India, the country's top commercial lender, is increasingly confident the central bank, faced with a slowing economy and rising inflation, will this month cut the amount of cash that banks must hold as reserves.
SBI Chairman Pratip Chaudhuri, who has regular contact with Reserve Bank of India policymakers, said he expects the central bank to loosen policy at its next meeting on April 17 by cutting its cash reserve ratio (CRR) by 75 basis points.
On Wednesday, Chaudhuri said he expected a cut either in the CRR - the percentage of deposits that lenders must park in cash with the central bank - or in interest rates.
According to a Reuters poll in March, 12 out of 14 analysts said they expected the RBI to reduce its key interest rate by 50 basis points to 8 percent by the end of June.
India's monetary policymakers left rates on hold in March, just days after they cut the CRR by 75 basis points to 4.75 percent, in a move that was bigger and earlier than markets had expected.
Growth in Asia's third largest economy slowed to 6.1 percent in the three months to December, the weakest in almost three years, and fell just short of 7 percent in the fiscal year that ended last month.
Headline inflation picked up for the first time in five months in February, to 6.95 percent, on higher food costs, though another measure of price pressures cooled, sparking market talk that a rate cut might be in the offing.
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