RBI Expected to Raise Interest Rates

India’s central bank is tipped to hike interest rates for a second straight month on Tuesday, sending a message that fighting inflation remains the priority for now.   Many analysts expect the Reserve Bank of India (RBI) to raise its benchmark interest rate by 25 basis points to 7.75 percent – a move that would follow a surprise quarter-point rate rise last month.

Since last month’s decision, inflation data from Asia’s third-biggest economy have provided grim reading for Raghuram Rajan, who took the helm as Reserve Bank of India (RBI) Governor in early September.

The wholesale price index, a closely-watched gauge of inflation, rose 6.46 percent in September from a year earlier on higher food prices. That’s well above the 5 percent level that many analysts say is the RBI’s comfort zone.


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