RBI interest rates News

The rate cut is only for the loans with six-months tenor, while it has been left unchanged in four other time categories including the one-year MCLR.

In the policy review meet earlier this month, majority of RBI's six-member MPC favoured to keep the key repo rate unchanged.

The Reserve Bank Friday maintained status quo on the benchmark interest rate but warned that volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation.

Earlier this month, the central bank had upped its retail inflation projection by 0.30 percent and kept the policy stance in the neutral zone, even as it hiked the key rate by 0.25 percent to 6.25 percent.

Acharya was of the view that the central bank should wait for some more time before withdrawing monetary accommodation.

In its last policy review in August, the RBI reduced the repo rate by 0.25 per cent to 6 per cent in August, citing reduction in inflation risks.

Consumer prices were forecast up at 3.20 percent in August from a year ago, jumping from July`s 2.36 percent, according to the poll taken September 5-8 of nearly 40 economists.

Inflation eased to its slowest pace in more than five years in June. 

Minutes of the RBI meeting in June reveal more flexibility among MPC members and the central bank might deliver a 25 bps rate cut in its August review, said analysts.

RBI Governor Urjit Patel had argued for avoiding premature policy action citing "high uncertainty" on inflation outlook while voting for status quo on interest rates at the monetary policy review earlier this month.

Under pressure to cut interest rates to lower cost of capital, RBI Governor Raghuram Rajan today said keeping inflation low is the key task for sustainable economic growth of the country.

Services sector increased to 50.8 in July from 47.7 in June.

"The Reserve Bank (RBI) is likely to wait and watch on rates in its third bi-monthly credit policy meet in August.

With deflationary trend continuing, industry body CII is expecting the RBI to cut the key policy rates by 0.75 per cent in three tranches this year to revive investments and growth.

As the RBI maintained a status-quo on interest rates on Tuesday, mutual fund houses said they expect the central bank to cut policy rates by 50 basis points in the next few months in view of improving macro-fundamentals.

Lauding RBI's role in helping bring down inflation, Chief Economic Advisor Arvind Subramanian said the central bank may further ease the interest rates as improvement on price front has opened the space for monetary easing.

Unfazed by criticism that central bank is keeping interest rates high, RBI Governor Raghuram Rajan on Friday said the role of regulators is not to boost the Sensex.

With the RBI holding interest rates despite persistent clamours for a cut, Finance Minister Arun Jaitley on Friday said the government shares a "healthy" relationship with the central bank.