Interest rates to fall by 25 basis points if CRR stable

Interest rates can be expected to go down if the Reserve Bank of India (RBI) does not hike the Cash reserve Ratio (CRR). Interest rates can fall by up to 25 basis points, based on the monetary policy review by RBI is expected on January 31, 2008.

As strengthening rupee against the US dollar is touted as another indication of an interest rate reduction.

In the last monetary review, the RBI had increased the CRR to absorb the excess liquidity in the system.

Banks had tried to deal with the impact of increased interest rates on their lending business by offering festive discounts. Banks like State Bank of India (SBI) and ICICI offered reduced interest rates to new customers till December, 31, 2007.