RBI may again raise interest rates

Mumbai : The Reserve Bank of India (RBI) is likely to? raise interest rates for the fifth time this year on Thursday to tame the inflation that is running well above comfort levels in the fast-growing economy.

According to most economists, the central bank may raise both its main policy rates by 25 basis points each, which means the repo rate, the rate at which it lends to banks, to 6 per cent and the reverse repo rate, at which it borrows from banks, to 4.75 per cent.

The central bank was left with little choice to maintain its mantra of using a calibrated approach to returning policy to more normal settings.

Some analysts also that it is a good time to continue normalising rates because inflation is expected to ease further in coming months and that might remove the urgency to keep tightening policy.

India’s economy grew in the March-June quarter by 8.8 per cent over a year earlier, its fastest pace in nearly three years while industrial output rose 13.8 per cent annually in July, the fastest since April.