RBI unlikely to cut rate in next policy review: SBI chief

Ahead of RBI’s monetary policy review, SBI chief Arundhati Bhattacharya on Thursday said RBI might leave interest rate unchanged in the next review but could soften its stance by the end of the current financial year.

“The fact of the matter is all the parameters are indicating that there will be further fall in inflation. Between November and January with the base effect it might go up a little bit. But by March, it will be well below whatever the glide path that is indicated by the Reserve Bank of India,” she said.

"RBI Governor has indicated that he will be data driven...May be by the end of the fiscal (cut in the interest rate by RBI)," she added.

Asked if she expected a rate cut from RBI next month, she said “no”.

"Base effects will also temper inflation in the next few months only to reverse towards the end of the year. The Reserve Bank will look through base effects," Governor Raghuram Rajan had said in his monetary policy announcement on September 30.

The RBI, which has been keeping rates at an elevated level citing high inflation, wants it to come down to 6 per cent by January 2016. It is scheduled to come out with its bi-monthly policy announcement on December 2.

Inflation based on the Wholesale Price Index cooled to a 5-year low of 1.77 per cent in October driven by softening prices of fuel and food items. At the same time, retail inflation, based on Consumer Price Index, also eased to 5.52 per cent at end of October.

With moderation in inflation, there is a widespread expectation that RBI will cut interest rate in its upcoming bi-monthly monetary policy.