RBI may raise key policy rates by 25-50 basis pts: Assocham | business | Hindustan Times
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RBI may raise key policy rates by 25-50 basis pts: Assocham

business Updated: Jul 26, 2010 21:32 IST

With headline inflation running into double digits, the Reserve Bank is likely to increase key policy rates by 25 to 50 basis points in its first quarterly review of the monetary policy on Tuesday, industry body Assocham said on Monday.

"The RBI is likely to unveil hawkish monitory measures such as increase of 50 basis points in repo rate (short-term lending) and 25 basis point hike in reverse repo rate...to rein in inflation," the chamber said.

Assocham, however, does not expect the central bank to tinker with the Cash Reserve Ratio, mandatory liquidity banks have to keep with the RBI, and Statutory Liquidity Ratio, the deposits that commercial banks are to park in government securities.

It said that the full impact of the recent hike in prices of petroleum products on price rise has not yet come and "as and when it happens, price rise of essential products and commodities including metals will further fuel".

Earlier this month, RBI had raised repo and reverse repo rates by 25 basis points to tame inflation.

Inflation continued to stand in double digits -- at 10.55 per cent -- in June. However, food inflation eased marginally to 12.47 per cent for the week ended July 10, from 12.81 per cent in the previous week.