RBI Unlikely to Slash Interest Rates in December Policy Review
SBI chief Arundhati Bhattacharya on Thursday said that the interest rate would be left unchanged by the RBI in the next review. She was speaking ahead of the RBI’s monetary policy review and also states that there is a chance of the RBI softening its stance as this financial year closes.
According to her, all the parameters indicate a fall in inflation, with the base effect taking a climb between November and January. By March, however, it is expected to dip below the RBI glide path.
She added that the RBI governor will be data driven and can expect rate cut by the end of the current fiscal. But she did answer in the negative when asked whether there would a rate cut from RBI next month.
On September 30th, during his monetary policy announcement, Governor Raghuram Rajan said that the inflation would be tempered in the next few months by base effects, but will be reversed as the year closes. He said that the Reserve Bank would be looking through with these base effects.
The rates have been kept at a higher level due to the alleged high inflation by the RBI, and they are expecting it to come down by 6 percent in January 2016. As per schedule, the bi-monthly policy announcement is expected to come out on December 2.
In October, inflation based on the Wholesale Price Index went down to 1.77 percent. This is the lowest it has cooled down within five years, with the low attributed to the softening prices of fuel and food items. Meanwhile, the retail inflation at the end of October, which is based on the Consumer Price Index, has also sunk down to 5.52 percent.
The RBI, during its upcoming bi-monthly monetary policy, is expected to announce a cut in interest rate owing to the moderation in inflation.
Interest rates, Policy Review, raghuram rajan, RBI governor, RBI’s monetary policy review, SBI chief Arundhati Bhattacharya
