Interest rates may go up further as the inflationary pressure is refusing to cool down, despite all the measures taken by government and RBI, feel market players.
On Tuesday, global merchant banker Lehman Brothers said in a report that inflation is expected to rise more to touch 14% by October-November.
Echoing the sentiment, ICICI Bank MD KV Kamath added that interest rates have not peaked as yet. He did not rule out the possibility of rates rising further. "Movement in interest rates will depend on price rise and subsequent measures taken by RBI to contain them," Kamath added.
To tame inflationary pressure, there are apprehensions that RBI may revise key rates upward even before the midyear review of monetary policy, which is scheduled for October 24, 2008. RBI has already raised the interest rate on the overnight fund (repo rate) to 9% and CRR also to 9%. The rise in rates has hit economic growth, which has been revised downward to around 8% from 8.5% by the central bank.
While FM’s economic adviser Arvind Virmani (L) feels that RBI will step up monetary measures to contain inflation, ICICI Bank’s K V Kamath says rates have not peaked yet .