New Delhi: India Inc. Tuesday reconciled itself to the Reserve Bank of India’s decision not to cut key lending rates, but hoped for a reprieve in the next year’s policy stance as the apex bank hinted at a high possibility of a rate cut in the foreseeable future.

“Industry was hoping that, given the combination of persistent weak demand and sustained moderation in inflation, the Reserve Bank could have found merit in an accommodative stance on interest rate reduction,” said Sidharth Birla, president, Federation of Indian Chambers of Commerce and Industry (FICCI).

Meanwhile, the industry reconciled itself with the RBI’s decision after Governor Raghuram Rajan reiterated the possibility of a rate cut early next year if the current downturn continued in inflation momentum.

He even indicated an interest rate reduction “outside the policy review cycle”.

India Inc.’s expectations of a rate cut Tuesday were, however, dashed even as recent economic data showed easing inflation coupled with slow economic expansion.

In an unapologetic stand, RBI Governor Raghuram Rajan said that a change in the monetary policy at the current juncture will be premature and that he will wait for the decrease in inflation to continue.

“The policy is led by the data we are receiving and we need to be relatively sure that there is a moderation in inflation. We don’t want any flip-flop in the future. Inflation is not a one-way street,” Rajan said.

Industry lobby Confederation of Indian Industry (CII) predicted a more accomodative monetary policy early next year.

“RBI has leaned in favour of anchoring inflationary expectations in its pursuit of finding a solution to the growth – inflation conundrum which is as per market expectations,” commented Ajay S. Shriram, CII president.

The industry’s clamour for a lower rate diminished a bit as the RBI took a dovish stand in its policy stance by indicating a rate cut early next year if inflation continued its current trajectory.

However, Associated Chambers of Commerce and Industry of India (Assocham) lamented the missed opportunity for the RBI.

“RBI has obviously overlooked strong demand from the industry for a cut in the interest rates. The industry’s demand for lower interest rates was fully justified,” Assocham president Rana Kapoor said.

“For one, the concerns over the inflation have largely been addressed with crude oil prices ruling at five-year low. We cannot ask for more. Secondly, growth remains muted. Certainly, if we need to really go in for the ‘Make in India’ initiative in the right earnest, the growth must be given priority.”

ICICI Bank’s managing director and chief executive Chanda Kochhar welcomed the RBI’s monetary stance that a rate cut might be highly likely early next year.

“The economy has already received a tremendous boost in terms of sentiment and confidence. The results of government actions to energise investment activity should start playing out in the coming months. As this happens and interest rates moderate, we should see an improvement in growth going forward,” Kochhar said.