15 Jun, 2008, 1115 hrs IST, PTI
NEW DELHI/MUMBAI: Woes of the UPA government on the price front are likely to continue with inflation expected to reach the double digit mark in the weeks ahead, which may force the Reserve Bank to raise short-term lending rate by another 25 basis points.
Despite the host of measures taken by the government and RBI, inflation has touched the seven-year high of 8.75 per cent and is likely to go up further next week after the index captures the impact of fuel price hike announced on June 5.
"Rising inflation rate may force the RBI to raise repo rate (short-term lending rate) by at least 25 basis points before the July policy announcement," HDFC Bank chief economist Abheek Barua told reporters.
Despite the host of measures taken by the government and RBI, inflation has touched the seven-year high of 8.75 per cent and is likely to go up further next week after the index captures the impact of fuel price hike announced on June 5.
"Rising inflation rate may force the RBI to raise repo rate (short-term lending rate) by at least 25 basis points before the July policy announcement," HDFC Bank chief economist Abheek Barua told reporters.
With the impact of fuel prices hike getting reflected in the inflation data, the rate could rise to a 13-year high of 10 per cent, opined Lehman Brothers economist Sonal Varma.
"We expect another 25 basis points hike in the repo rate in quarter three of 2008 and one percentage increase in cash reserve ratio during this financial year," she said.
RBI has, after a gap on more than a year, increase the repo rate to 8 per cent from 7.75 per cent to contain inflation by curbing demand.
Even according to government estimates, inflation may peak at 9.70 per cent in October before petering out.
Inflation, which has already crossed 8.7 per cent for the week ended May 31, may touch 9.5 per cent in June, following the government decision to raise prices of petrol, diesel and cooking gas, official sources said.
"We expect another 25 basis points hike in the repo rate in quarter three of 2008 and one percentage increase in cash reserve ratio during this financial year," she said.
RBI has, after a gap on more than a year, increase the repo rate to 8 per cent from 7.75 per cent to contain inflation by curbing demand.
Even according to government estimates, inflation may peak at 9.70 per cent in October before petering out.
Inflation, which has already crossed 8.7 per cent for the week ended May 31, may touch 9.5 per cent in June, following the government decision to raise prices of petrol, diesel and cooking gas, official sources said.
Save all your chat conversations. Find them online.
No comments:
Post a Comment