Although the inflation rate in the country has dipped down to near zero level to 0.44% bankers do not expect any further cut in the interest rates.

In the past six months, RBI has cut the policy rates five times and bankers expect that now the regulator would not bring about any changes. The apex body would rather wait to analyze the impact of its previous moves.

The chief economist at Bank of Baroda, Rupa Rege Nitsure said, "The RBI is fully aware that it has done substantial easing. Banks have also brought down their interest rates in response to the RBI action. Therefore, its unlikely to cut interest rates further just because of the inflation numbers."

Recently in the March, RBI has announced a cut in key policy rates by 50 basis points. The regulator has cut the repo and reverse repo rates to 5% and 3.5% respectively.

Tushar Poddar, economist at Goldman Sachs, said, "With a 50-basis-point cut in both the repo and the reverse repo on March 4, we do not foresee further reverse repo cuts until the end of the elections."

Since mid-October 2008, RBI has slashed the interest rate by a substantial percentage to help the economy to spurt economic growth. The cash reserve ratio (CRR) has been dipped by 400 basis points to 5% and similarly the repo rate also reduced the 400 basis points in the last six months. The repo rate is the rate at which banks avail short term credit from the RBI.

Further Poddar expects the RBI to slash the rates by up to 150 basis points towards the middle of this year. He also anticipates the inflation rate to turn negative in April with the trend following until 2009 end.

Industry sources say that the inflation rate would not have any long lasting effect. An analyst with a PSU bank said, "The markets had anticipated inflation to hit this number by the end of March. However, it happened a lot earlier. We were expecting an inflation of 0.89 percent."

Moreover the bond markets also do not expect any immediate cut in the interest rates.