HDFC Bank sees another rate hike in May | business | Hindustan Times
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HDFC Bank sees another rate hike in May

business Updated: Mar 17, 2011 20:38 IST
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With the Reserve Bank of India revising upward its inflation estimate for FY 11 to eight% from the earlier 7%, the rate hiking cycle in FY 12 is now likely to be more extended than initially anticipated and far more front-loaded, a leading economist said.

"We expect inflation to print in at 8.1% in March and move close to nine% by August," HDFC Bank's chief economist, Abheek Barua, said in a statement in Mumbai on Thursday.

In his reaction to the Reserve Bank hiking its repo and reverse repo rates by 0.25% each in its mid-quarter monetary policy review on Thursday, Barua said that with inflation in February at a high of 8.3% instead of the sub-8% as expected, the apex bank's move was expected.

"Indeed, with inflation for the month of February coming in as a rude shock to the market (the reading came in at 8.3% against expectations of 7.8% and on top of an upwardly revised estimate of 9.4% for December) at the start of the week, this is the very least the central bank could have done to assuage concerns on price pressures," he said.