RBI may hike rates to tackle food inflation

RBI may hike rates to tackle food inflation

The RBI had left key short-term interest rates unchanged at its mid-quarter review earlier this month, but said that it should not be interpreted as a reversal of tight monetary policy undertaken from the start of this year.

Deloitte Principal Economist Shanto Ghosh said the central bank may again tighten monetary policy to tame inflation. “RBI is likely to hike repo and reverse repo rates by 25 basis points each in January.”

The weekly food inflation was back in double digits after three weeks in December. The inflation was 12.13 per cent for the week ended December 11.

Axis Bank chief economist Saugata Bhattacharya also said that the RBI would go in for a marginal rate hike to balance the demand-supply mismatch in the market.

Food inflation index constitutes over 14 per cent of the overall WPI inflationwhich was at 7.48 per cent for November.