Experts believe that with existing inflationary pressures, the RBI governor is likely to hike the repo rate in the upcoming monetary policy review on October 29
GN Bureau | October 15, 2013
Looks like Reserve Bank of India (RBI) governor Raghuram Rhajan will have to wait longer before he can give in to popular demand of easing up interest rates thanks to persistent inflationary pressures. With the rise in the wholesale price index (WPI) based inflation last month to 6.46 percent, the highest in seven months, experts expect Rajan to maintain a hawkish stance and hike the interest rate.
In the second quarter monetary policy review to be announced on October 29, experts have pegged a repo rate hike by 25 basis points. Repo rate is the rate at which banks borrow from the RBI and this impacts the interest rates charged on loans to consumers.
The increase in the WPI inflation from 6.1 percent in August to 6.46 in September, mainly due to high food prices, has put greater pressure on the RBI to further tighten liquidity in the economy.
In his debut monetary policy review last month, Rajan had raised the repo rate by 25 basis points to 7.5 percent.
While experts are pretty sure of an in interest rate hike, India Inc is hopeful that Rajan will keep the poor investor sentiment in mind and go in for a rate cut despite high inflation.
"The increase in inflation to a seven month high is a cause for concern especially as the economy is in the midst of investment led slowdown and there are no major signs of a turnaround in industrial activity in the country," said Chandrajit Banerjee, director general, CII.
He further said, "The revival of inflation, especially that of food prices, calls for urgent steps to address supply side bottlenecks in agriculture. Besides, the rise in inflation should not come in the way of the forthcoming policy of monetary easing by the RBI as the arrival of kharif crop in October would provide some relief in food prices, going forward. Moreover, it is of utmost importance to shore up flagging investor sentiment which has been adversely affected by high interest rates."
The Essential U. R. Ananthamurthy Edited by N. Manu Chakravarthy and Chandan Gowda Aleph Books, Rs 899, 312 pages
Early Bird and the Rainmatter Foundation have announced five bird walks, led by naturalists, across India on June 10. The walks, to be held in Agartala, Dehradun, Mysore, Panjim, and Tirupati early in the morning, are part of the Rainmatter Foundation’s Walking Lightly campaign, being observed throug
The Ministry of Environment, Forest and Climate Change, Government of India organized the World Environment Day on Monday with a thrust on Mission LiFE. The concept of LiFE, i.e., Lifestyle for Environment was introduced by prime minister Narendra Modi at the World Leaders` Summit in Glasgow at COP26, when
Green Banking is an initiative taken by the banks to promote environment-friendly practices and reduce carbon footprint of their activities. Green financing (a part of ‘Green Banking’) is a broad term that can refer to a financial investment flowing into sustainable development projects and ini
The gross Good & Services Tax (GST) revenue collected in the month of May, 2023 is ₹1,57,090 crore of which CGST is ₹28,411 crore, SGST is ₹35,828 crore, IGST is ₹81,363 crore (including ₹41,772 crore collected on import of goods) and cess is ₹11,489 crore (including ₹1,057 crore collecte
Climate change rising temperature and sea levels are posing new risks for coastal cities. With population growth rate of 1%- 2% in India every year, Mumbai too is growing and is population will double from 20 million to 40 million in the coming years. The city is also at the risk of rising sea level. It ne