<p> With retail inflation showing no signs of abating, RBI faces tough choice on cutting rate a second time this fiscal to meet government and industry expectations of lowering cost of borrowing to boost growth.<br /><br /></p>.<p>Most bankers and experts believe the possibility of an interest rate cut by the Reserve Bank on August 4 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.<br /><br />“I am not expecting any rate cut,” SBI Chairperson Arundhati Bhattacharya said.<br />“WPI is (negative) but CPI has gone up a little. Though it is mainly on account of food prices. The RBI has been benchmarking it to the CPI numbers, I think it is unlikely,” she added.<br /><br />While retail inflation in June rose to an eight-month high of 5.4 per cent, the overall Wholesale Price Index (WPI) based inflation was (-)2.4 per cent in the same month.<br />RBI mostly tracks the consumer price inflation for its monetary policy decision.<br /><br />“It would be a status quo. I don’t think there has been much change in the macroeconomic conditions from the last policy. RBI is closely monitoring monsoon. Nothing indicates that it is a good or a bad monsoon,” Bank of Baroda MD and CEO Ranjan Dhawan said.<br /><br />Some bankers are of the view that there is a scope for further rate cut by RBI, but if it accommodate in this policy is something in the realm of speculation.<br /><br /></p>
<p> With retail inflation showing no signs of abating, RBI faces tough choice on cutting rate a second time this fiscal to meet government and industry expectations of lowering cost of borrowing to boost growth.<br /><br /></p>.<p>Most bankers and experts believe the possibility of an interest rate cut by the Reserve Bank on August 4 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.<br /><br />“I am not expecting any rate cut,” SBI Chairperson Arundhati Bhattacharya said.<br />“WPI is (negative) but CPI has gone up a little. Though it is mainly on account of food prices. The RBI has been benchmarking it to the CPI numbers, I think it is unlikely,” she added.<br /><br />While retail inflation in June rose to an eight-month high of 5.4 per cent, the overall Wholesale Price Index (WPI) based inflation was (-)2.4 per cent in the same month.<br />RBI mostly tracks the consumer price inflation for its monetary policy decision.<br /><br />“It would be a status quo. I don’t think there has been much change in the macroeconomic conditions from the last policy. RBI is closely monitoring monsoon. Nothing indicates that it is a good or a bad monsoon,” Bank of Baroda MD and CEO Ranjan Dhawan said.<br /><br />Some bankers are of the view that there is a scope for further rate cut by RBI, but if it accommodate in this policy is something in the realm of speculation.<br /><br /></p>