The Reserve Bank of India (RBI) is all set to announce its second quarter credit policy review on Tuesday, Oct. 30, and a majority of economists expect the central lender to a cut in cash reserve ratio (CRR).

While 36 per cent of economists polled by Bloomberg expect the RBI to cut CRR by 25 basis points (bps), 29 per cent expect no change and 7 per cent expect a cut of 50 bps.

When it comes to key interest rate cut, 57 per cent do not see any big modifications from the RBI, while 39 per cent expect a cut of 25 bps and merely 4 per cent are anticipating a cut of 50 bps.

CRR can be described as the share of deposits that banks have to keep with the central bank, while Repo rate is a rate at which banks borrow funds from the central bank.

As rate of inflation remains high, the RBI has been hesitating in slashing the interest rate for some time. The rate of inflation, based on the Wholesale Price Index, jumped from 7.55 per cent in August to 7.81 per cent in September. Earlier in July, the inflation rate was at 6.9 per cent.

Leif Eskesen, an economist with HSBC, said, "Given the slightly better domestic activity readings and lingering upside risks to inflation, the RBI is expected to keep the policy rate on hold on 30 October, although another CRR cut is possible."

Economists are of the view that it would be a positive surprise if the central bank cuts key rates. Though it would be at odds with the central bank's historically conservative approach, yet it could do so under the influence of the finance ministry.