RBI may still hike rates before July - HSBC

MUMBAI Mon May 31, 2010 1:53pm IST

A man walks past the entrance of the Reserve Bank of India headquarters in Mumbai January 27, 2009. REUTERS/Arko Datta/Files

A man walks past the entrance of the Reserve Bank of India headquarters in Mumbai January 27, 2009.

Credit: Reuters/Arko Datta/Files

Related Topics

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)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Kashmir Package

Kashmir Package

Modi announces relief package for flood-hit Kashmir.  Full Article 

Microsoft Earnings

Microsoft Earnings

Microsoft sales beat Street hopes, cloud profits up.  Full Article 

U.S. Economy

U.S. Economy

Spectre of no-inflation world looms over Fed's return to normal  Full Article 

Insider Trading

Insider Trading

Rengan Rajaratnam, SEC to settle civil insider trading charge.  Full Article 

Market Watch

Market Watch

Betting on the beaten up? Investors pin hopes on stocks in Europe, Japan.  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage