RESERVE Bank of India Governor Raghuram Rajan will leave interest rates unchanged today, economists say, pausing after the four rate cuts he has delivered since January to boost growth in Asia’s third-largest economy.

    As Rajan prepares for his 14th rate-setting meeting since taking over the top job at the bank in September 2013, all 11 economists polled said that India’s central bank will leave its repurchase agreement rate, which is its main lending rate, unchanged at 6.75 percent.

    All those interviewed agreed Rajan will refrain from changing the policy stance until early next year to ensure inflation is in check and an expected increase in U.S. interest rates passes through without causing too much turmoil in emerging markets.

    With India’s retail and wholesale price-based inflation dipping to new lows in July thanks to a sharp fall in global commodity prices, Rajan has been able to surprise markets a few times this year, driving down rates from 8 percent in January to 6.75 percent in September, a four-year low.

    Rajan unexpectedly cut rates by a total 0.5 percentage points in January and March, outside of the Reserve Bank of India’s scheduled rate-setting meetings. Last month, he shaved off another 0.5 percentage point, more than analysts had forecast.

    “The Reserve Bank of India frontloaded the rate cuts last time, and since then there has been some pressure on inflation,” said Pranjul Bhandari, chief India economist at HSBC in Mumbai. “Inflation pressure has now started to build up.”

    The rout in global commodity prices has helped cool inflation in India that was at double-digit levels until late 2013. But after easing sharply until July this year, inflation has been on the rise again, climbing for three consecutive months.

    Consumer-price inflation, a key gauge the Reserve Bank of India watches when it decides its policy moves, accelerated to 5 percent from a year earlier in October due to higher food prices. The central bank predicts it will keep accelerating and reach 5.8 percent in January, which is below its 6 percent target for that month.

    But the room for maneuver now looks narrower than three months ago, when prices were rising by less than 4 percent year over year.

    On the growth front, India’s economy has been sending contradictory signals. Industrial output growth slowed to its weakest rate in four months in September, with production just 3.6 percent higher from a year earlier.

    Tremors in global markets, due to a worse-than-expected slowdown in China and as the U.S. Federal Reserve moves closer to raising rates, have put Asian economies on the defensive. Currencies and stock markets in the region have fallen sharply this summer.

    While India has been spared the pain, it isn’t immune to global headwinds. The rupee lost 2.5 percent against the U.S. dollar in the past month.

    Rajan said last week that China’s slowdown is hurting India too, as demand for Indian goods and services weakens in China as well as other important markets affected by its slowdown. India’s exports have been declining for almost an year. (SD-Agencies)