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Dec 18, 2013, 02.19 PM IST | Source: Moneycontrol.com

Expect high probability of repo rate hike in Jan 2014: ICRA

The correction in vegetable prices is expected to dampen food inflation in December 2013, which would ease further in subsequent months based on the expectation of a favourable rabi harvest. Expect a high likelihood of a Repo rate hike in January 2014, says ICRA.

Naresh Takkar, MD, ICRA
By Naresh Takkar, MD & CEO, ICRA Ltd

"Having expected the RBI to raise the Repo rate by 25 bps following the hardening of inflationary expectations, the pause in the mid-quarter policy review came as a surprise. Additionally, the recent improvement in systemic liquidity and a reiteration of the RBI’s stance regarding ensuring adequate credit flow should benefit the productive sectors."

"The correction in vegetable prices is expected to dampen food inflation in December 2013, which would ease further in subsequent months based on the expectation of a favourable rabi harvest. However, core-WPI may continue to display a gradual rise, reflecting the uptrend in prices in export-oriented sectors and some lagged resetting of prices to offset the Rupee depreciation. Accordingly, given the guidance provided by the RBI, we expect a high likelihood of a Repo rate hike in January 2014."

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READ MORE ON  Naresh Takkar, MD & CEO, ICRA, RBI

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