RBI may still hike rates before July - HSBC
MUMBAI (Reuters) - The Reserve Bank of India (RBI) may yet raise interest rates before a scheduled policy review in July, HSBC said on Monday, after data showed India's economy grew an expected 8.6 percent in the final quarter of fiscal 2009/10.
"Sure, the euro jitters may have left policy-makers across the world in a more accommodative mood, but in India tightening is now needed to avoid a hard landing later on," Frederic Neumann, managing director and co-head of Asian Economics Research at HSBC, wrote in a note.
As domestic demand growth outstrips demand overseas, India's trade deficit may widen sharply, Neumann said, adding this is partly the reason for HSBC's view that the Indian rupee may be one of the Asian currencies likely to underperform.
India's economy grew at its fastest pace in six months in the quarter through March 2010, fuelled mainly by government and consumer spending, which is expected to allow policymakers to focus on anchoring inflation that is hovering near 10 percent.
The 8.6 percent expansion in the fourth quarter of the fiscal year 2009/10 was broadly in line with a median forecast of 8.7 percent in a Reuters poll and lifted the annual average growth rate for the full fiscal year to a slightly better-than-expected 7.4 percent.
(Reporting by Jeanette Rodrigues; Editing by Sunil Nair)
(For more business news on Reuters India click in.reuters.com)
- Tweet this
- Share this
- Digg this
- U.S. strikes have slowed Iraq militants but not weakened them - Pentagon
- Russia can run on empty for a year if sanctions block new bonds
- Mumbai hit by big power cuts after technical glitch at Tata Power unit
- Rupee sees biggest fall in three weeks on broad dollar gains
- 100 days of Modi: Good for business, not so good for marginalised groups
The BSE Sensex on Tuesday breached the psychologically key level of 27,000 points for the first time to hit its third consecutive record high as blue-chips such as HDFC Bank gained after recent data raises hopes about the economy. Full Article