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State Bank of India expects RBI to hold interest rate

India's retail inflation remained above 7% in October for a second straight month, with vegetable prices at elevated levels. At current levels, inflation is well above the RBI's medium term target of 4%.

November 26, 2020 / 10:14 PM IST
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State Bank of India expects the country's central bank to hold interest rates as inflation remains elevated, the chairman of India's largest lender Dinesh Kumar Khara said.

"The stance will continue to remain accommodative but they may not be in a position to cut interest rate in immediate future," Khara told a summit organised by the Hindustan Times.

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Khara's comment comes only days before the monetary policy committee of the Reserve Bank of India (RBI), the country's central bank, is due to meet between Dec. 2 and Dec. 4.

India's retail inflation remained above 7% in October for a second straight month, with vegetable prices at elevated levels. At current levels, inflation is well above the RBI's medium term target of 4%.

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Inflation remained high due to supply chain constraints which can be eased once India begins to unlock further, after when the RBI may be in a position to cut rates, Khara said.

Since March, the RBI has cut its repo rate by 115 basis points to cushion the shock from the coronavirus crisis.
Reuters
first published: Nov 26, 2020 10:14 pm

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