RBI Unlikely To Cut Rates As Inflation High: Report


NEW DELHI:  With inflation still high, the Reserve Bank at its fourth bi-monthly policy review is unlikely to cut interest rates, Care Rating has said in a report.

“Given the economic parameters of improving growth of 5.7 percent (Q1 FY15) GDP and elevated retail inflation on the back of potential threats to inflation going ahead, we do not foresee any room for a rate cut in the upcoming policy announcement,” the ratings agency said ahead of the RBI’s policy review scheduled Sep 30.

Consumer price index (CPI) based retail inflation eased to 7.8 percent in August from 8.59 percent in April. Wholesale price index (WPI) inflation has also eased to 3.74 percent in August from 5.55 percent at the start of the current fiscal.

The RBI headed by the monetarist-inclined Governor Raghuram Rajan has set a target for CPI inflation at 8 percent by January 15 and 6 percent by January 2016.

The RBI left key interest rates unchanged in its third bi-monthly monetary policy review early August, saying near-term tightening is not expected if inflation continues to ease.

“Reserve Bank will continue to monitor inflation developments closely, and remains committed to the disinflationary path of taking Consumer Price Index (CPI) inflation to 8 per cent by January 2015 and 6 per cent by January 2016,” Governor Rajan had said in his policy statement.

Source: IANS