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RBI Says No Rate Cut On Interest Rates

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RBI, the central bank led by Governor Raghuram Rajan has said that there are no rate cut on interest rates. He cited that it is premature to slash rates but hinted that it would cut in the coming year 2015. Both the policy rates and CRR, Cash reserve Ratio has been left unchanged, according to the review meeting of RBI on Dec 2, 2014.

The current key rates are as follows as on Dec 2,2014

Repo Rate – 8%

CRR Rate – 4%

India’s annual consumer price inflation (CPI) dropped to 5.52 per cent in October, drastically from a peak of 11.16 per cent struck in November last year. This is due to the drop of oil prices globally. Rajan wants to watch the inflationary trend after November to be sure about its downward trajectory. If he is convinced about the downward trajectory he would announce a rate cut in the next review meeting. This has led to RBI saying no rate cut on Interest rates in the current meeting today (Dec 2, 2014).

The next policy review on the key policy is on February 2015.