RBI May Hold Interest Rates Steady On Oct 4

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The Raghuram Rajan era is over and for the first time, new RBI governor Urjit Patel, would decide on interest rates with a new monetary policy committee.

It is very difficult to predict the outcome of the decision by the committee on Oct 4, 2016.

RBI May Hold Interest Rates Steady On Oct 4
Some analysts believe there could be a cut in interest rates of 0.25 per cent, while others feel that there could a status quo on the policy.

Let us look at inflation

Retail Inflation for the month of August was placed at 5.06 per cent. This is slightly above the RBI's comfort level of 5 per cent. Interest rates have been cut dramatically in the last few years.

On the other hand growth rates have also been chugging along and holding interest rates steady at least till December, should be good enough for the RBI.

However, if the RBI cuts interest rates, it could lead to a slight reduction in the lending rates.

Ahead of the festive season, it could mean some cheer to borrowers, if interest rates are reduced.

However, at the moment it is difficult to say, if there will be any interest rate cuts.

We would stick our necks out and say that the RBI would hold interest rates steady at least till Dec, 2016.


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