RBI to review Monetary Policy; unlikely to cut interest rates

New Delhi: The Reserve Bank of India (RBI) is likely to keep interest rates unchanged at its monetary policy review on Tuesday.

Most bankers and experts believe that the possibility of an interest rate cut by the Reserve Bank is very low as retail inflation remains high.

However, India Inc is pitching for a rate cut because of low wholesale inflation and slowdown in industrial growth. Even the government wants the benchmark rate to be cut to prop up growth.

While retail inflation in June rose to an eight-month high of 5.4 percent, the overall wholesale price index (WPI) based inflation was (-)2.4 percent in the same month.

RBI mostly tracks the consumer price inflation for its monetary policy decision.

In its last review on June 2, RBI cut repo rate 0.25 percent for the third time this year.

During the calender year, RBI has reduced the rate thrice by 0.75 percent. It was cut by 0.25 percent each in January, March and June.

RBI cut the policy rate (the short-term lending rate) to 7.25 percent in June from the earlier 7.5 percent, but left cash reserve ratio (CRR) and statutory liquidity ratio (SLR) unchanged at 4 percent and 21.5 percent, respectively.

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Source:Zeenews

RBI