PTI

Mumbai, Jul 27: With inflation plateauing and global oil prices falling, home and consumer loanees may heave a sigh of relief as RBI is likely to announce a 'benign' monetary policy on Tuesday so as not to impede growth.

Several Bankers and industrialists felt there could be no more hike in short-term key rates and cash reserve ratio (CRR) but some said if there was any hike it could be a mere 0.25 per cent to tame inflation now at 11.89 per cent against RBI's forecast of 5-5.5 per cent by end-fiscal.

CRR is the percentage of amount that banks are required to park with the Reserve Bank. Repo is the rate at which RBI lends to banks.

"Inflation seems to have plateaued...with oil prices coming down, the RBI could be expected to come up with a benign monetary policy regime," Godrej Group Chairman, Adi Godrej, said in Mumbai.

Corroborating Godrej's view, HDFC Bank's Managing Director Keki Mistry and IDBI Chairman, Yogesh Agarawal said it is unlikely that the apex bank would hike rates as it would be detrimental to the industry, already affected by high interest rates.

"I do not think that RBI will further hike rates at the quartrely review of monetary policy. There are no indications of a further hike in RBI key-rates. They may wait for 1-2 weeks to see how the inflation is moving," Mistry said.

"I do not expect further tightening. The apex bank is likely to wait for some time till the policy actions they have already taken show results. A further hike in key rates is unlikely in my opinion," Agarwal said.

Axis Bank's treasury head, Partha Mukherjee also said further tightening in monetary policy is highly unlikely in a fragile liquidity system as it would bear a high advesre impact on banks.

"The inflation is likely to continue in the next 3-4 months. The monetary and fiscal actions adopted are expected to cool down the inflation by that time," Mukherjee said.

SBI Chairman O P Bhatt, howevever, had a different take saying the Reserve Bank might not relax its monetry policy and may even opt for 0.25 per cent hike either in CRR or repo rate given the high inflation.

Reserve Bank hiked CRR by 1.25 per cent to 8.75 per cent and repo by 0.75 per cent to 8.5 per cent since April, 2008 to contain inflation.

The CRR hike of 1.25 per cent, in five tranches, as aimed at sucking out excess liquidity of Rs 47,500 crore from the system.

Facing a liquidity crunch, many banks had hiked their lending rates and deposit rates to protect their margins but only to see a sluggish growth in their Q1 numbers.

Banks, including the second largest ICICI Bank, had witnessed a slowdown in their credit offtake in the past few months as high interest rates generated less borrower attention.

Bank of Baroda's Chief Economist, Rupa Rege Nitsure expected that the apex bank would effect a 0.25 per cent hike in its repo rates but is unlikely to increase CRR as it would further worsen the liquidity situation of banks.

"Following a series of hikes in the CRR, the system is facing tight liquidity conditions. Chances of a further hike in CRR is highly unlikely," Nitsure said.