RBI may hike key interest rates by 1%

Leading economists and financial sector analysts fear that the unabated inflationary pressures may push the RBI to further tighten the monetary policy by raising key interest rates by another one per cent.
"RBI could hike its benchmark rates to about 100 basis points during the year. The next phase of the rate hike would come in the July 29 policy," Crisil principal economist D K Joshi told PTI.
To anchor inflation, the central bank is likely to increase repo rate (short-term lending rate) by 25 basis points and CRR (the percentage of cash banks have to park with RBI) by 50 basis points next month when its come with the first quarterly review, he said.
For the week ended June 14, inflation soared to a 13-year high of 11.42 per cent against 11.05 per cent in the previous week.
If inflationary condition persists, the central bank would further increase rates in phases. On June 24, RBI increased the repo rate and CRR by 0.5 per cent each to tame inflation.
According to Goldman Sachs, RBI is expected to hike another 100 basis points through a combination of raising the repo rate, 50 basis points compared to our earlier expectation of 25 basis points and the cash reserve ratio by 50 basis points over the next three months, with risks towards more tightening.
Global rating agency Moody's, in its report, said RBI will further tighten monetary policy this year, but this will unlikely occur prior to the scheduled meeting in late July.