New Delhi: Chief Statistician Pronab Sen
on Thursday said that the Reserve Bank is unlikely to signal hike in
interest rates in its forthcoming monetary review next week
despite inflationary pressures.
When asked whether the RBI would review policy rates in
view of inflationary pressures, he replied in the negative.
The RBI would announce its quarterly policy on
October 27.
Inflation is rising mainly due to base effect, Sen said
at a function organised by think-tank Economist Intelligence
Unit (EIU).
He added that the effect of drought has already been
factored into prices so there would not be further
acceleration in food prices, though inflation is likely to
remain high in the coming months.
"I don't think the rate of increase (of food prices) is
going to accelerate...(though) levels will remain high," he
said.
Inflation rose to 1.21 percent for the week ended
October 10 as prices of major food items firmed up further.
The wholesale price-based inflation stood at 0.92 percent in the previous week.
Sen further said that there is no evidence of
inflationary pressures on non-agricultural items.
EIU Research Director Manoj Vohra too said that the
central bank is unlikely to signal hike in key rates in its
monetary policy, however, it can raise the Cash Reserve Ratio,
the amount of funds that banks have to park with RBI, by 25-50
basis points.
"RBI will have a close look at Cash Reserve Ratio (CRR).
It might hike CRR by 25-50 basis points," Vohra said.
At present, CRR stands at five percent, while the Repo
Rate (the rate at which banks borrow from RBI) is at 4.75 percent and Reverse Repo (the rate at which RBI borrows money
from banks) stands at 3.25 percent.
He further said that the RBI might signal hike in
interest rates if there is high inflationary pressures.
Bureau Report
First Published: Thursday, October 22, 2009, 19:05