RBI says no rate reduction soon. But what if they do reduce?

Like I was guessing earlier, RBI Deputy Governor came out today and said that the decline in inflation doesn't seem like a long term thing instead is likely to go up in near future and so rates may not come down soon.

The fall in price of crude oil and other commodities is beneficial to the Indian economy, but policy makers cannot jump to the conclusion that the trend was firmly established. "Inflation still has a long way to go," the deputy governor told the audience at a chief financial officers' summit organised by industry body CII.

There is a fight going between deflation and inflation. Most developed economies are deflating and they are printing currencies and trying to encourage more debt creation there to fight it. While emerging economies like India are having inflation because all that easy money from developed economies are actually coming here.

But what happens when RBI does reduce rates? If they reduce by 1% and you are a retired person living with say 20 lakh savings, then your annual income falls by Rs 20000. So your monthly income falls from Rs15000(assuming 9% interest) by about Rs 1600.

But where does all that money go that so many interest earning retires lose due to interest rate reduction? It goes as interest rate savings to the pockets of younger people who have home loans, car loans etc. It also spurs new borrowing by people who could not afford loans due to higher rates.

Rate reduction is essentially a wealth distribution from the savers who did a life time of work and saved for retirement into the the pockets of new borrowers in economy.

Do the retired people agree to give up their income? No, they have no say in this. Govts and Central Banks will decide how much money they need from you and take it, whether you like it or not.

On top of that, a lower rate will increase inflation and you lose about 7% or more of your savings that way too, whether you like it or not.