India’s Central Bank Unlikely to Cut Rates Until February Unless Inflation Drops or Global Crisis Emerges, Says Axis Bank Treasurer

India‘s central bank, the Reserve Bank of India (RBI), is unlikely to cut interest rates until February 2020, unless there is a significant drop in inflation or a global crisis unfolds, according to Neeraj Gambhir, Group Executive for Treasury at Axis Bank. The RBI has left the repo rate unchanged at 6.50%, while keeping its growth forecast for the financial year at 6.5%, with predicted average inflation of 5.1%. Gambhir stated that unless there is a surprise in the inflation rate, or an event, such as a banking or financial crisis, the rate is unlikely to be cut until early next year. The RBI aims to anchor long-term inflation expectations and maintain positive rates if inflation remains high. The central bank is expected to continue withdrawing liquidity from the banking system to maintain a reduction in liquidity, although liquidity has risen to above INR2tn ($24.25bn) in June, forcing the bank to undertake two-to 14-day reverse repos.