sures. Not surprising, since India has been battling near double-digit inflation as the economy shows robust growth. Will the bank repeat the tightening move on Tuesday at its next rate-setting meeting?Thirteen out of 20 economists polled by Dow Jones Newswires expect the RBI to raise both its key rates by 25 basis points. One expects a 25 basis point rise in the reverse repurchase rate only. Six are calling a pause in both rates. Currently, the RBI s borrowing rate or reverse repurchase rate stands at 5%, while the lending or repurchase rate stands at 6%.Here is a look at five key considerations that will be driving the RBI s decision to raise (or not).1. Inflation: This has been the central bank’s bugbear for over a year, with food prices largely the culprit. Though food price inflation has come down from its December high of an over 20% rise year-on-year, it still remains high. Policymakers now say that a part of this rise may be structural in nature as Indians increase the protein intake in their diet.The pace of inflation in manufactured goods has remained subdued, but with global commodity prices on rise, input costs could go up, pushing up prices.In recent months, the headline inflation rate has been easing,cheaptomsshoessalei.com, and policy makers hope a favorable base effect and good winter harvest will help bring the rate down to 6% by the end of March. But it is also the RBI’s job to manage inflation expectations. According to the central bank’s household expectation survey in June, the inflation rate families expect to see next June is 11.9%.2. Economic Growth: The economy remains buoyant with the government estimating economic growth at 8.5% for the current fiscal year, a forecast the RBI kept unchanged on Tuesday. However, the sharp slowdown in industrial output growth in August raised some concerns on whether industrial output is stalling. Output growth at factories fell to 5.6% in August, according to data released last month, from July’s high of 15.2%. Credit Suisse has said that a closer look at the index suggests that overall industrial production has been stagnant since January 2010, in seasonally adjusted terms.3. Liquidity: Cash remains tight. The interbank call rate shot up to a two year high of 12% Friday on huge outflows from banks so that investors could buy into the public offering from Oct. 18 by state-run firm Coal India Ltd, India’s largest equity sale ever. The RBI on Friday announced temporary liquidity alleviating measures like holding more liquidity auctions and easing a bond holding rule. On Tuesday the RBI said it decided to keep the cash reserve ratio unchanged at 6%.4,cheap toms shoes. Capital Inflows: Large capital inflows have complicated matters for the RBI. Record portfolio inflows in the stock markets have pushed up the rupee, which has gained 5.9% against the U.S. dollar since September. A rising rupee hurts exporters by making exports for expensive for customers.RBI Governor Duvvuri Subbarao has said that the central bank will intervene in the forex market if inflows become lumpy or volatile,toms shoes sale. So Related articles:

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