Further rate hike by RBI may hurt growth: Experts

Analysts feel the RBI should not opt for another hike in the calendar year.

Last Updated: Mar 17, 2011, 14:35 PM IST

New Delhi: Terming the RBI`s move to raise key policy rates by 25 basis points as in-line with market expectations, analysts said the apex bank should not go for any further rate hikes in the current year in order to keep the India growth story intact.

The Reserve Bank of India today raised its short-term lending (repo) rate and borrowing (reverse repo) rate by 25 basis points each to 6.75 percent and 5.75 percent, respectively, for the eighth time since March, 2010 in a bid to rein in inflation.

Market observers feel the 25 basis points hike by the apex bank is on expected lines and was discounted by the market.

"RBI has acted on expected lines. The problem of inflation is still on top of RBI`s mind, so they have continued tightening monetary policy even at the cost of growth momentum slackening," Motilal Oswal Financial Services Joint Managing Director Raamdeo Agrawal said.