India's RBI May Signal Tightening Of Interest Rates Before Year-End: Moody's

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India's apex bank, the Reserve Bank of India, might signal tightening of interest rates before the end of the current year due to inflationary pressures imposed mainly by drought, reported the PTI quoting Moody's arm, Moody's economy.com.

The RBI may start raising its short-term lending and short-term borrowing rates, the repo rate and the reverse repo rate, before the year-end, though it is expected to wait till the beginning of the next fiscal, the report said.

The country witnessed worst drought conditions in key agricultural areas. Inflation is also rising due to the government's offer of 'minimum support prices' to protect farmers.

Wholesale inflation marginally declined for the last week of September, compared to the previous week. Finance Minister Pranab Mukherjee has estimated wholesale price inflation at 6% by March end.

The apex bank has projected inflation at 5% by end of March 2010. The RBI's second quarterly review of credit policy is due on October 27.

(Market News Provided by RTTNews)