The Reserve Bank of India has left all its key rates unchanged in its Mid-quarter review of Monetary Policy and the reason behind it the higher inflation which could further soar in the next two months.
However, Reserve Bank of India gave hopes of cut in key interest rates in the fourth quarter (January- March) to support growth.
Although inflation appears to be moderating, the central bank feels that the rise in price of food and commodity prices remains a contingent risk.
Hence, RBI left the repo rate unchanged at 8 per cent and cash reserve ratio is held steady at 4.25 per cent of the deposits.
The Finance Minister said: "While headline inflation has moderated to 7.5 per cent, inflation measured by the consumer price index remains sticky at 9.9 per cent. There is no reason at all to be complacent."
Mr. M Narendra, Chairman and Managing Director of Indian Overseas Bank said that his bank will not be able to cut interest rates on retail deposits.
Adding to it, Mr. C V R Rajendra, Executive Director of Bank of Maharashtra also said that there is no point changing rates as the policy rates remains same.