RBI may raise rates by 25 bps in Jan: Poll

The Reserve Bank of India (RBI) is expected to raise key rates by at least 25 basis points (bps) this month to tackle rising inflationary pressures. Analysts expect a total rise of 75 bps in 2011. As food and fuel prices push up inflation, median forecasts for January have been upwardly revised by 25 bps since the last poll in mid-December.  Of 17 economists surveyed, 12 expect RBI to increase rates by 25 bps in January, while one expects a 50 bps increase. The other four expect RBI to keep rates steady in January. RBI’s next policy review is on January 25. Currently at 6.25 per cent, RBI’s key lending rate or repo rate is seen at 6.5 per cent by January-end and seven per cent by year-end. The reverse repo or borrowing rate, which stands at 5.25 per cent, is seen at 5.5 per cent by January-end and six per cent by year-end.