RBI May Not Cut Rates Despite Decline In Inflation: Analysts

Although retail inflation decreased to five-year low of 6.5% in September, the Reserve Bank of India (RBI) may not cut rates, says analysts.

"We believe that the RBI will remain on hold for the rest of this fiscal," ratings agency Crisil said. It cited factors like the continuing upward risks to the 6% target for January 2016. It said this would make cutting rates difficult.

Singapore-based brokerage firm DBS said the pressure is likely to build on RBI to reduce the rates, "but the central bank is unlikely to shed its cautious stance as yet." It added that RBI Governor Raghuram Rajan will "look through these swings" in the inflation numbers.

Industry body FICCI said, "The prices are expected to remain moderate. CPI inflation is moving in consonance with RBI’s target rate and this should bring in some breathing space."