There could be one more round of rate hike when the central bank meets for a policy review on July 27 because of inflationary pressure in the economy, a top adviser to the prime minister said on Friday.
C. Rangarajan said there was a huge buildup in inflationary pressure in the economy which prompted the central bank on Friday to hike its short-term lending and borrowing rates by 25 basis points each, effective immediately.
"I expect another round of rate hike in the July policy review." Rangarajan, chairman of the prime minister's economic advisory council, told Reuters.
The central bank raised its main lending rate to 5.50 per cent from 5.25 per cent, and the reverse repo rate, at which it absorbs excess cash from the banking system, to 4 per cent, from 3.75 per cent.