RBI unlikely to signal hike in interest rates: Pronab Sen

Chief Statistician Pronab Sen today said that the Reserve Bank is unlikely to signal hike in interest rates in its forthcoming monetary review next week despite inflationary pressures.

When asked whether the RBI would review policy rates in view of inflationary pressures, he replied in the negative.

The RBI would announce its quarterly policy on October 27.

Inflation is rising mainly due to base effect, Sen said at a function organised by think-tank Economist Intelligence Unit (EIU).

He added that the effect of drought has already been factored into prices so there would not be further acceleration in food prices, though inflation is likely to remain high in the coming months.

"I don't think the rate of increase (of food prices) is going to accelerate...(though) levels will remain high," he said.

Inflation rose to 1.21 per cent for the week ended October 10 as prices of major food items firmed up further.

The wholesale price-based inflation stood at 0.92 per cent in the previous week.

Sen further said that there is no evidence of inflationary pressures on non-agricultural items.

EIU Research Director Manoj Vohra too said that the central bank is unlikely to signal hike in key rates in its monetary policy, however, it can raise the cash reserve ratio, the amount of funds that banks have to park with RBI, by 25-50 basis points.