Quarterly Review of RBI scheduled on Jan. 24, 2006

Given the state of inflation and interest rates, it is very less likely that RBI would be signaling any increase in interest rates. However, with the rising consumer confidence and increase in capital expenditures across the industries signals that the credit off-take would continue to increase and may exert an upward pressure on interest rates.

Implications of an increase in current account deficit are yet to be fully understood. I recall an article that I read in Economic Times sometime in December 2005. I personally feel that the deficit is not a concern now, but this needs to be linked to the oil prices and FII inflows. Would be keeping a close watch on this over the next a couple of quarters.

For more on this read “RBI Quarterly Review No Sparks expected” published in Business Line on Jan.10, 2006.