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Are we getting close to end of rate hike cycle?

Are we getting close to end of rate hike cycle?
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First Published: Mon, Jul 25 2011. 01 24 AM IST
Updated: Mon, Jul 25 2011. 09 59 AM IST
Commercial banks as well as Indian corporations do not want the country’s central bank to go for yet another rate hike, the 11th since March 2010, when it unveils the quarterly review of monetary policy on Tuesday, but the Reserve Bank of India (RBI) is unlikely to oblige them. My guess is RBI governor D. Subbarao will once again take his now-famous baby step and hike the policy rate by 25 basis points (bps) to 7.75%, raising it by 450 bps in the current rate tightening cycle.
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Tamal Bandyopadhyay is a deputy managing editor of Mint.
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One more rate increase likely
Samiran Chakraborty
The backdrop to the Reserve Bank of India (RBI) monetary policy meeting next week is not very different from what it has been in the recent past. Inflation is clearly at an unacceptable level and growth is moderating, but not collapsing. So, it is quite likely that the policy response from RBI will be a 25 basis points rate increase to reiterate its anti-inflationary stance. However, there is considerable uncertainty over the policy trajectory going forward and hence the policy statement will be scrutinized closely for RBI’s assessment of the current economic situation and any forward looking cues.
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Samiran Chakraborty is Asia economist, Standard Chartered Bank.
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Carry on hiking the policy rate
Richard Iley
Pause in response to building downside risks to global and domestic growth? Or press on with its long-established campaign of lifting policy rates to combat inflation? That, in a nutshell, is the policy choice facing the Reserve Bank of India (RBI) at its latest policy review meeting next week.
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Richard Iley is chief economist for Asia Pacific excluding Japan at BNP Paribas SA.
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• No time to slacken policy rate
Ajit Ranade
Imagine the following scenario: The central bank has been trying valiantly to control inflation. It is using every trick in its books to tame the monster. Apart from frequent interest rate hikes, it makes hawkish sounds, curtails credit, and also urges the central government to cut wasteful spending, and rein in the fiscal deficit.
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Ajit Ranade is chief economist, Aditya Birla Group.
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• Inflation control: chasing a chimera
Siddhartha Roy
We have had 10 rate hikes in past 15 months, yet inflation continues to be stubbornly persistent. Will a 25 or even a 50 basis points hike help in containing it? One basis point is one-hundredth of a percentage point.
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Siddhartha Roy is economic adviser, Tata group.
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• Taming inflation needs audacity
Jahangir Aziz
The economy is slowing on many fronts. Industrial production, car sales, Purchasing Managers’ Index—all point to activity moderating. On cue, there has been a lot of hand wringing over this. But a slowing economy is not necessarily a bad thing. Indeed, the real risk is the economy will not slow sufficiently to bring down the raging inflation.
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Jahangir Aziz is senior Asia economist, JPMorgan Chase.
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First Published: Mon, Jul 25 2011. 01 24 AM IST