Interest rate may go up after RBI's 3rd quarterly review

Mumbai, Jan 30 (UNI) Decks are almost cleared for further hike in the interest rates in the third quarterly credit review to be held by the Reserve Bank of India (RBI) here tomorrow.

In its macroeconomic and monetary development report released on the eve of the review, RBI has agreed to inflationary pressures--a clear signal pointing towards hardening of interest rates. It is to be noted that talking to reporters here early this month, the RBI Governor Dr Y V Reddy had said that the inflation hovering around 5.5 per cent at that point of time was very much on the expected lines.

However, it is not yet clear that interest rate hike will go up to what extent after the quarterly review is finally out by tomorrow evening. It is time for banks to gear up for a rise in repo (lending) and reverse repo rates.

The review assumes significance as it comes at a time when the Centre was busy chalking out its annual budget for the next financial year which was likely to be presented on the floor of Parliament by next month. Meanwhile, S&P has said in its study that Indian economy might be growing above potential, but it was not overheating.

UNI