Goldman predicts RBI raising rates by another 1%
By Joseph Samson
Jan 14, 2011
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Goldman Sachs has predicted that Reserve Bank of India will have to raise policy rates by atleast 1 percentage point this year seeing the current inflation figures. Goldman says that the value of rupee may depreciate in this scenario as the imports of the country are likely to exceed exports.

"If unbridled optimism about economic fundamentals gives way to an appreciation of risks which can then be meaningfully priced by markets and addressed by policymakers , we think it would lead to a more sustainable growth environment," Tushar Poddar, economist at Goldman Sachs , wrote in a note titled ‘India; Risks at the start of 2011'.

"With inflation remaining uncomfortably high, we continue to think RBI will need to raise interest rates by a total of 100 bps in 2011 starting on January 25, and market expectations of rate hikes will continue to rise," expressed Mr Poddar.


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