RBI likely to cut interest rates

The Reserve Bank of India is expected to slash key policy rates in the upcoming monetary policy review meet on September 29, considering the wholesale price-based inflation has been projected to decline further to 4.3% in August.

Reserve Bank is likely to cut interest rate as the wholesale price-based inflation is expected to decline further to 4.3% in August, Moody's Analytics said today.

"India's wholesale prices likely fell 4.3 per cent on year-on-year in August, a further decrease from last month's surprise 4.1 per cent decline. Energy and manufactured-good costs are expected to continue their decline, while food prices will likely fall steeply as a result of base effects," said Moody’s Analytics in a PTI report.

It further added, “the Reserve Bank of India paused its monetary easing cycle, but we expect there will be further cuts in 2015 as inflation continues to fall."

It should be noted that the apex bank’s decision to cut policy rates is primarily influenced by the consumer price inflation in the country. Interestingly, the retail inflation too has dropped to a record low of 3.78% in July.