RBI unlikely to cut interest rates in December policy review, says SBI chief

State Bank of India (SBI) Chairperson Arundhati Bhattacharya on Thursday said the Reserve Bank of India (RBI) may leave interest rate unchanged in the next review but could soften its stance by end of the current financial year.

The fact of the matter is that all the parameters are indicating that there will be further fall in inflation.

Between November and January inflation might go up a little bit with the base effect. However, by March it will be well below whatever the glide path that is indicated by the the central bank, Bhattacharya said.

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

When asked if she expected rate cut from the central bank in December, the SBI chief said no.

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

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

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

Wholesale price-based inflation 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, counsumer price-based retail inflation also eased to 5.52 per cent at end of October.