WOULD RBI RAISE CREDIT RATE???

The top officials of the Reserve Bank of India (RBI) would meet the chiefs of both public as well as private sector banks on Monday to take stock of the business environment before announcement of the first quarter policy review. RBI is scheduled to review the monetary and credit policy on July 26. In the pre-policy meet the Indian Banks Association would also present its view on further policy actions. At a recent meeting, economists had concluded RBI should continue the rate increase cycle to control inflationary expectations. “Everyone felt RBI should continue to tighten monetary policy to bring down inflationary expectations, though there were differences in opinion on how much more the central bank needed to raise the rates. I  think there could be a further rise of 50 basis points in two policy reviews, before RBI takes a pause, RBI had raised policy rates 10 times since March 2010 but inflation continues to stay high. “Inflation is expected to remain in double digits till August, as the impact of recent fuel price rises fully sets , The Wholesale Price Index stood at 9.06 per cent in May. Growth in bank advances has showed signs of a slowdown because of the impact of rising interest rates. As on July 2, bank advances grew 20 per cent, compared with 21 per cent a month ago.