Home and auto loans will not become cheaper as the Reserve Bank kept the policy rate unchanged for the fifth time in a row today, but hinted at softening of its stance "early next year" if inflation continues to abate and there is an improvement in fiscal health.
The decision to keep the short term lending (repo) rate unchanged at 8 per cent disappointed the industry which said RBI Governor Raghuram Rajan in his fifth bi-monthly policy statement could had been more accommodating to help prop up the sagging economy.
"A change in the monetary policy stance at the current juncture is premature. However, if the current inflation momentum and changes in inflationary expectations continue, and fiscal developments are encouraging, a change in the monetary policy stance is likely early next year, including outside the policy review cycle," he said.
The repo rate continues to be at 8 per cent while the cash reserve ratio has also been retained at 4 per cent.
Following the policy announcement, most of the bankers said that there will be no change in lending and deposit rates for now.
United Bank of India Executive Director Deepak Narang said the margins of banks are already under pressure due to high level of non-performing assets (NPAs) or bad loans.
"So, I don't see a cut in the interest rate at the moment," he added.
Following the RBI stance, the BSE's 30-share index Sensex closed at 28,444, down 115.61 points or 0.40 per cent.
On the inflation trajectory, Rajan said he expects it to ease further and average at the 6 per cent.
"Over the next 12-month period, inflation is expected to retain some momentum and hover around 6 per cent, except for seasonal movements, as the disinflation momentum works through," he said in the bi-monthly review of the monetary policy.
