New Delhi, March 7: The Reserve Bank of India (RBI) as well as the finance ministry are unlikely to push for moves to bring down the RBI’s interest rates vis-à-vis banks.

Chances for a lowering of the RBI’s lending rate to banks diminished with headline inflation touching 5 per cent.

Top finance ministry officials said the RBI had almost ruled out the rate cut in discussions with them.

The central bank has always maintained that 5 per cent inflation was the highest it could tolerate.

RBI governor Y.V. Reddy, in a prepared delivered in Paris today, said, “considerable weight is currently accorded by the Reserve Bank of India to price and financial stability while recognising its twin objectives of growth and stability”.

Politically, too, officials said, price stability has become a major concern given that a series of elections lie ahead. Political parties tend to believe that high prices lose votes for ruling governments.

Inflation hit 5 per cent in late February for the first time in nearly nine months on the back of higher food prices, forcing policy makers to push aside the pleas of Indian industry and consumers for lower lending rates.

The wholesale price index rose 5.02 per cent in the 12 months to February 23, against the previous week’s 4.89 per cent and well above forecasts of 4.7-4.8 per cent made by various analysts.

Credit rating agency Crisil’s chief economist D. Joshi said, “Inflationary pressures have heightened and are likely to remain. The government will have to take measures to control the price spurt.”

Officials said interest rates were unlikely to be lowered now, though finance minister P. Chidambaram’s move to cut the rates for people who took small housing loans might work out.

However, besides inflation, global oil prices have hit $105 a barrel today and are not expected to come below $95 in the next few weeks. Some of this may have to be passed on to Indian consumers.

In cereals, the Food and Agricultural Organisation has said that despite record output, import costs could go up 35 per cent.

“These price hikes, as and when they come, have to be factored in whatever interest rate regime is being looked at. We have in the past favoured lower interest rates but given the current situation it will be difficult to press with such an agenda,” economists with the finance ministry said.