Reserve Bank of India expected to raise interest rates again

Vastavam web: The Reserve Bank of India is likely to raise interest rates on Wednesday while retaining a neutral policy stance as it aims to strike a balance between rising inflationary pressures and still recovering growth.If the RBI increases the rates by 25 basis points, it would be the first time since October 2013 that the central bank has hiked borrowing costs at two consecutive policy meetings.Thirty-seven of 63 economists in a Reuters poll last week said the RBI will raise rates n Wednesday, while 22 said the next hike would come later this year, or early in 2019.

“Since the RBI is committed to bringing down inflation, they don’t have a choice but to raise rates,” said Rupa Rege Nitsure, group chief economist at L&T Finance Holdings.India’s annual consumer inflation INCPIY=ECI hit 5 percent in June, the eighth straight month it topped the RBI’s medium-term 4 percent target.Global crude oil prices have surged nearly 20 percent this year and crossed $80 a barrel in May, their highest since 2014.