Repo hike to put pressure on interest rates: Moody's

Credit ratings agency Moody’s on Monday said the Reserve Bank of India’s (RBI’s) recent move to hike short-term borrowing and lending rates to tame inflation would put pressure on overall deposit and interest rates.

While agricultural production would be the main determinant of consumer price inflation during the next few quarters, the central bank was also expected to keep a tight lid on the monetary policy regardless of how inflation moves, the ratings agency added.

“(Last) Friday’s actions by RBI will put pressure on bank deposits and lending rates, which have been stable and low since November,” Moody’s said, adding higher interest rates would lead to increased savings.