Sujan Hajra,Chief Economist,Anand Rathi : RBI hike in line with expectations

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 Sujan Hajra,Chief Economist,Anand Rathi Financial Services

“The 25 bps rate hike (repo & reverse-repo) today are in line with our expectations. While we see significant softening of WPI inflation – from 8.4% in Dec’10 to ~7% by Jan’11 and ~6% by Mar’11 – this would still be well above RBI’s comfort zone. We expect RBI to hike rates (repo & reverse-repo) by 25 bps once more in 4QFY11 and another time in 1QFY12. We, therefore, expect repo at 7% and reverse-repo at 6% by Jun’11. Beyond Jun’11 we expect growth would come in greater focus for RBI’s policy intervention.”