The Reserve Bank may find it difficult to cut interest rate in its second quarter monetary policy review later this month in view of high inflation,HDFC Chairman Deepak Parekh said today.
“Inflation numbers have marginally tweaked up. It is very difficult for RBI to cut interest rates. I don’t think this time interest rates will come down because (inflation) numbers don’t justify reduction,” he said.
Parekh was talking to reporters after a meeting with Finance Minister P Chidambaram here.
The RBI will come out with its policy review on October 30. With WPI inflation rising to a 10-month high of 7.81 per cent in September,the scope for reduction of policy rates diminishes even as industry has been demanding a rate cut to boost growth.
Inflation has remained above 7 per cent since late 2009. This is much above the RBI’s comfort level of 5-6 per cent.
Parekh said housing finance companies have already lowered their interest rates.
The RBI has held its short-term lending (repo) rates unchanged at 8 per cent since April 2012. In its policy review on September 17,RBI reduced the cash reserve ratio (CRR) the percentage of deposits banks keep with central bank