Another rate hike feared in central bank’s policy review Tuesday

July 25th, 2011 - 1:42 pm ICT by IANS  

Sensex Mumbai, July 25 (IANS) All eyes will be on the Reserve Bank of India (RBI) as it takes up a review of the monetary policy Tuesday, with most fearing that the country’s apex bank will raise interest rates once again.

If it does that, this would be the 11th rate hike since January 2010 and could result in commercial banks passing on the increase to its lenders — making loans to individuals as well as companies that much costlier.

In its last review, the RBI had hiked short-term lending rates by 25 basis points in a bid to curb inflation and indicated that more such increases were in the offing.

Analysts expect at least another 25 basis point hike in lending rates this time around.

Though food inflation came down to an over two-year low for the week ended July 9, overall inflation is still hovering close to double digits.

Stocks markets, too, reflected worries of another rate hike. The 30-scrips Sensex of the Bombay Stock Exchange was ruling subdued in pre-open trade Monday.

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