
India central bank's liquidity bazooka raises rate cut hopes
rate cut next month.
The Reserve Bank of India's (RBI) measures, expected to collectively infuse 1.5 trillion rupees ($17.39 billion) into the banking system, come after months of a cash crunch in the banking system that had pushed up overnight and short-term lending rates.
«The urgency that was being felt in the market has been addressed by the RBI through these steps,» said A Prasanna, head of research at ICICI Securities Primary Dealership.
«I think a rate cut would be the next logical action,» Prasanna said, adding the announcements signal that the central bank is more confident about inflation management.
The RBI's rate-setting panel will announce its policy review on Feb. 7, after the annual federal budget on Feb. 1.
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