RBI may not hike rates in FY19: SBI

The Reserve Bank of India might not hike rates in rest of the FY19, according to an SBI report. An SBI Ecowrap report on Sauturday said, "CPI inflation marginally increased to 3.77 per cent in September 2018. Interestingly, on a m-o-m basis, rural food inflation has registered a decline, even as headline registered an increase."

"Core CPI inflation declined to 5.81 per cent in September 2018 from 5.92 per cent in August 2018. We expect CPI for FY19 at 4.2 per cent. Our inflation trajectory projection makes us believe that rate hike is now off the table in FY19," it added. 

After back-to-back hike since June, the Reserve Bank of India (RBI) earlier this month kept interest rates unchanged, surprising markets that had expected a rate hike to support tumbling rupee and combat inflationary pressures from high oil prices.

With five of its six members voting for a status quo, RBI's monetary policy committee (MPC) left repo rate at 6.50% and changed policy stance to 'calibrated tightening' from 'neutral', which RBI Governor Urjit Patel said meant there would be no rate cut in the current cycle. Vowing to keep the inflation rate under targeted 4%, RBI warned that volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to growth and inflation.

A majority of the analysts and bankers had expected that RBI will raise interest rate by at least a 0.25% with some even rooting for a 0.50% increase in view of the developments over the last few days where rupee had continued to slide and international oil prices hit four-year high. Soon after the monetary policy announcement, the rupee slid to a new record low, falling past the 74 to a dollar mark, before closing down 0.3% to 73.7650. The domestic unit has fallen 14.5% since January, making it the worst performing major Asian emerging market currency.

Earlier, citing sources a PTI report said that the RBI will not relax the October 15 deadline for global financial technology (fintech) companies to comply with its data localisation norms in the public interest.