Rate hike on the horizon

Rate hike on the horizon

On Tuesday, the Reserve Bank of India will announce its latest tweaks to the monetary policy. This quarterly review comes at a time when the economy is projected to grow at 9.5%, factory output continues to increase, albeit at slower rates, corporate profits rise and foreign investors pour money into local stocks. However, high inflation is casting a shadow on this benign situation and threatens to destabilize the economy and its pace of growth. Consequently, most economists expect governor D Subbarao to hike key interest rates by at least 25 basis points on Tuesday. Expect car, home and personal loans to get costlier while stocks of sectors such as auto, realty and banks might take a tumble.

Also See | Rate Hike (Graphic)

Graphic by Yogesh Kumar/Mint

Compiled by Ashwin Ramarathinam