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Bank shares surge on rate cut hopes

Last Updated 05 June 2012, 15:58 IST

Bank scrips such as SBI, Canara Bank, Punjab National Bank, Bank of Baroda and Indusind Bank are trading higher by 1.3-3 per cent each in trades on Tuesday after the central bank hinted at cutting the key policy rates in the upcoming policy review on June 18.

Ahead of its mid-quarterly policy review, the RBI hinted at cut in interest rates, saying that moderation in inflation due to lower economic growth and cooling global oil prices provide room for easing monetary policy. “The growth is somewhat lower than expected and that may have positive, moderating impact on core inflation,” RBI Deputy Governor Subir Gokarn said.

“Oil prices have come off somewhat more than expected. Those are the two factors that suggest more room (for easing monetary policy),” he said. Analyst Nomura also expects RBI to cut the repo rate by 25 basis points at its June 18 meeting, joining the growing chorus predicting the RBI will ease policy this month.

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(Published 05 June 2012, 15:58 IST)

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