The Reserve Bank of India (RBI) expects inflation to moderate further in the next 2-3 months that may lead to cut in interest rates by the Central Bank, RBI deputy governor KC Chakrabarty said on Thursday.
“We are trying to bring down inflation ... There is a probability that inflation would come down in the next few months. In the next 2-3 months, inflation should come down,” he said after inaugurating a rural branch of ICICI Bank here.
Asked if there is a possibility of RBI reducing the policy rates in its mid-quarter policy review on December 18, Chakrabarty said the repo rate will be cut when inflation comes down.
Wholesale price index-based inflation for October moderated to 7.45% from 7.81% in the previous month.
Stressing that high inflation is inimical to growth, the deputy governor said: “People are saying because of high interest rate, growth is coming down. What we are saying is the interest rate is high because inflation is high.”
He added: “That’s why RBI's first concern is to bring down inflation.”