The RBI is all set to keep policy rates unchanged in its monetary policy review, which is going to be done next week. This despite the fact that inflation for the second consecutive month in November has dipped.

There is a possibility of a CRR cut of 0.25 per cent.

“The decline in core inflation is welcome and will provide some comfort to the RBI, but the November uptick in CPI inflation and the firm HSBC PMI price readings suggest that we are not out of the woods yet,” pointed out HSBC Chief Economist for India and ASEAN Leif Lybecker Eskesen.

Talking about wholesale price based inflation, it eased to 7.2 per cent last month as against 7.5 per cent in October on account of a dip in fuel and core inflation.

Barclays Capital Economist Siddhartha Sanyal said: “As regards the widely expected rate cuts, the RBI seems to prefer to lag rather than undertake any easing, in anticipation of easing inflation pressures.”

“We continue to expect the RBI to reduce the cash reserve ratio (CRR) on December 18 by another token 25 bp,” he said.

Over the last three months, the RBI has minimized the cash reserve ratio, the part of deposits banks are neededto keep with RBI, by 0.50 per cent to 8 per cent. But these reduction did not lead to an easing of overnight rates.