RBI likely to cut rate in December post September's steady inflation: BofAML

New Delhi: The Reserve Bank is likely to go for a 25 bps rate cut at its next policy review meet on December 6 after September CPI inflation came in at a soft 3.3 per cent, says a report.

"We grow more confident in our call of a 25 bps RBI rate cut on December 6 after September CPI inflation came in at a soft 3.3 per cent, the same as August's downwardly revised 3.3 per cent," Bank of America Merrill Lynch (BofAML) said in a research note.

The Reserve Bank at its policy review meeting earlier this month kept the key interest rate unchanged at 6 per cent, citing upward trend in inflation.

As per Consumer Price Index (CPI) data, retail inflation came in at 3.28 per cent in September, unchanged from August, despite softening of vegetable and cereal prices.

According to the global financial services major, the October CPI inflation is expected to be around 3 per cent following the drop in tomato and onion prices and government cutting the excise duty on petrol and diesel.

"Against this backdrop, we expect the RBI's Monetary Policy Committee (MPC) to cut in December to signal a bank lending-rate cut before the 'busy' October-March industrial season intensifies," the report noted.

India's economic growth slipped to a three-year low of 5.7 per cent in the first quarter of the current fiscal, leading to calls by the industry for a rate cut.