India’s retail inflation drops to 5.88 percent in November

The Reserve Bank of India (RBI) is likely to raise the benchmark interest rate by another 25 basis points at its next policy review in February, according to a Reuter poll of economists, who cited rising inflationary pressures.
The central bank is widely expected to hike its key repo rate – at which it lends to commercial banks – to 6.25 percent from 6.00 percent at the February 7 review.
That would be the fifth increase since a 25 bps hike in August after inflation rose sharply in January to a four-month high of 5.21 percent. The poll of 34 economists showed the repo rate would likely stay at 6.25 percent until the end of this year and rise to 6.50 percent in early 2019, before climbing further to 7 percent by mid-2020.
The RBI has raised rates five times since August as inflation has jumped up, but the central bank said it is still too decided on the most effective way to anchor inflation expectations. It also said it would not hesitate in making additional rate hikes if needed to curb rising prices.
The poll showed inflation would likely ease to 4.6 percent in the year to March 2020, from an expected 4.9 percent in February and 5.1 percent for all of this fiscal year ending March 31, 2021.
The RBI has been trying to anchor consumer price index (CPI) expectations at the 5 percent level by raising interest rates gradually but consistently over a while.
The central bank has raised rates by 50 basis points so far this fiscal year, including two hikes in January and February, to bring the repo rate to 6.5 percent. In June last year, it cut interest rates for the first time in over four years after a long period of tightening policy to curb inflation.