Based on past WPI inflation data, we see that every time the real rate turned positive, the regulator reduced the SB rate 1 , never to take corrective action (in terms of increasing the SB rate) even on subsequent high negative real rates. Chart 1 provides this picture in very clear terms. From 2003 to 2009 the real rates on SB accounts remained at historically low levels and persisted there for six years. Barring the transitory reversal in end 2009, this high negative real rate continues to pinch the small savers till date. One can clearly see that at least during April.
