RBI Unlikely To Cut Rates Recently As Inflation High: Report

"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.

"While inflation at around 8 per cent in early 2015 seems likely, it is critical that the disinflationary process is sustained over the medium-term," Rajan said.

The repo rate, or the interest that banks pay when they borrow money from the RBI to meet their short-term fund requirements, was left unchanged at 8 per cent.

The reverse repo rate, or the interest that the RBI pays to commercial banks when they park their surplus short-term funds with the central bank, had been adjusted to 7 per cent.

The cash reserve ratio (CRR) was left unchanged at 4 per cent. The marginal standing facility rate and the Bank Rate were also kept unchanged at 9 per cent.

The statutory liquidity ratio (SLR), the mandatory amount of bonds lenders must keep with the RBI, was cut by 0.5 per cent to 22.0 per cent of their net demand and time liabilities (NDTL) with effect from August 9, 2014.

Care Rating said the RBI may not cut SLR on Tuesday, but even such a cut would not come as a surprise.

"It (SLR cut) could probably be a part of the long term goal of lowering the SLR rather than a short term measure," the agency said.

Indian Banks Association chief executive MV Tanksale said there was no need for an SLR cut because credit pick-up was slow and there was also no urgent need of liquidity.

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