Though RBI has boxed itself in by conveniently referring to elevated levels of CPI and the current account deficit (CAD) as being the reason for not cutting policy rates from time to time, and then ignoring them when it has felt the need to cut rates, it is clear that if a rate cut is to help, this has to be accompanied by a CRR cut. Right now, with low deposit growth, banks have no option but to hike deposit rates across different tenure—so the only way to break this cycle and lower lending rates is to cut CRR or find other ways to infuse liquidity........
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