RBI rate hike: Investors, economists watchful ahead of monetary review

The Reserve Bank of India's (RBI) mid-quarterly monetary policy review on Friday is being anxiously awaited by economists and investors alike, as hopes rise that the central bank would hold off another rate hike in the wake of slowing growth and negative industrial output.

While the last 13 such meetings since early 2010 have resulted in key interest rates being increased, this time the apex bank may be more inclined to give assurance to industry as inflation has started showing signs of decline.

Food inflation has dipped to 4.35 per cent for the week ended December 3, while headline inflation - though still above 9 per cent - has shown some signs of decline.

On the other hand industrial production has taken a beating in the past four months. High interest rates have deterred investments and brought down the index of industrial production (IIP) into negative terrain. IIP for October was logged at (-) 5.1 per cent.

Traders believed that a rate hike was unlikely this time as well with the benchmark index for Indian equities - Sensex - rising over 156 points in early trade on Friday.

The 30-scrip index of the Bombay Stock Exchange, which closed down 45 points on Thursday, was ruling at 15,993.07 points, about 15 minutes into trade - 156.6 points, or 0.99 per cent, up from its previous close at 15,836.47 points.

With inputs from IANS