RBI may hike rates by 25 basis points: SBI

Wednesday, January 12, 2011

NEW DELHI - India’s largest lender State Bank of India (SBI) Wednesday said the Reserve Bank of India (RBI) can hike interest rates by 25 basis points when it reviews the monetary policy later this week.

“There should be at least 25 basis points hike in the interest rates,” SBI’s chairman O.P. Bhatt told reporters on the sidelines of an event here.

Bhatt said hiking rates amidst the continuing uncertainty in the stock market can lead to problems.

The prime minister is also expected to meet RBI Governor Duwuri Subbarao Wednesday to discuss ways of curbing high inflation.

India’s food inflation has soared to over 18 percent, led by onions which are selling in most parts of the country at Rs.55-60 per kg.

Analysts and the industry widely expect the central bank to raise key interest rates in order to tame inflation - a move which could have an adverse impact on industrial output that slowed down to an 18-month low in November.

According to official figures, the index for industrial production (IIP) nudged upwards by a meagre 2.7 percent in November, losing close to 9 percentage points from the 11.3 percent growth it logged in the like month of 2009.

Even in October 2010, the IIP had risen by 11.29 percent.

–Indo-Asian News Service


Filed under: Economy

will not be displayed