RBI may hike policy rates by 25 basis points: Dena Bank | india | Hindustan Times
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RBI may hike policy rates by 25 basis points: Dena Bank

india Updated: Jan 13, 2011 21:43 IST

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Dena Bank today said it expects the Reserve Bank to raise its key policy rates by 25 basis points in the forthcoming quarterly review to tame inflation.

"I do feel the RBI will go in for some kind of rate hike may be around 25 basis points," Dena Bank Chairman and Managing Director D L Rawal said in Gandhinagar on Thursday.

The RBI is widely expected to raise short-term lending and borrowing rates -- repo and reverse repo -- in its policy review on January 25.

Food inflation for the week ended December 25 stood at 18.32 per cent, while core inflation during November was 7.48 per cent putting pressure on RBI to raise policy rates.

Earlier this week, bankers requested the Reserve Bank of India to slash the CRR and SLR besides keeping the key policy rates unchanged amid tight liquidity situation and rising credit demand during the customary pre-policy meet.

At present CRR -- the mandatory cash balance that banks park with the RBI -- stands at 6 per cent, while SLR stands at 24 per cent.

On CRR hike, Rawal said, "banks have asked for a reduction but I do not think that RBI will increase SLR or CRR."

On Wednesday, State Bank of India Chairman O P Bhatt had said that Reserve Bank would raise its key policy interest rates by at least 25 basis points to fight inflation.