Will there be a rate hike by RBI?

Fed rate hike in global markets as well as FED chairperson, Janet Yellen’s hawkish drive on rate hike has been cherished by the markets.

Considering Indian context, there are minimal chances of an interest rate hike.The scenario is quite different when it comes to the Indian economy. India, being a developing country, obstacles tend to occur in terms of  interest rate cut cycle.

The Reserve Bank of India (RBI) has reduced interest rate from 8 per cent to 6.25 per cent in last couple of years. Annual consumer price inflation in India accelerated  stronger than expected to 3.65 per cent in February, mainly driven by food prices, after falling to its lowest level in past five years in January.

Core CPI inflation weakened to 4.8 per cent on a yearly basis in February against 5 per cent in January; and core CPI inflation excluding petrol and diesel eased to 4.4 per cent in February from 4.6 per cent in January.

Going forward, Urjit Patel, RBI governor, may not reduce rates, eyeing increasing inflation data, even as the Monetary Policy Committee (MPC) is expected to decide on interest rate in April.