Inflation in India is spreading and the Reserve Bank of India (RBI) could raise interest rates before its scheduled policy review late next month to tame high prices, a top government official said on Wednesday.
The central government's chief statistician, Mr Pronab Sen said core inflation “is now starting to get worrying,” with price pressures becoming more pervasive.
“We are seeing it happen in non-agricultural products. That is one area of worry that has to be tackled.”
When asked whether the Reserve Bank of India could opt for a rate hike before its July 27 review, Mr Sen said the Reserve Bank could raise rates “any time.”
Speculation that the Reserve Bank would raise policy rates before its July review have been mounting after headline inflation rose to a higher-than-expected 10.16 per cent in May, the highest rate in the G20 group of leading economies. Markets are divided over whether the central bank will move ahead of the review although most analysts surveyed by Reuters expect the RBI to wait until July 27 due to liquidity concerns.
RBI has raised policy rates twice this year by a total of 50 basis points in March and April. — Reuters