RBI expected to hike key rates

The Reserve Bank of India (RBI) is expected to hike key rates; cash reserve ratio (CRR) and repo rate in July 29, 2008.

RBI is expected to hike repo rate by 25 basis points and CRR by 50 bps in the policy for a tighter monetary policy.

RBI may hike the key rates to hold unrestrained growth in money supply over the last two years, which may be contributing to higher inflation.

Reportedly, money supply had been growing at 20 per cent per annum in spite of RBI's target to bring it down to 17-17.5 per cent. CRR hike by 50 basis points could hold back banks' lendable resources by about Rs 19,000 crore.