The Reserve Bank of India is widely quoted raising its key lending rate by 35 basis points on Wednesday . Global crude oil prices have been declining in recent months, but not reflected in domestic prices .
MUMBAI: While inflation has weakened to 6.77% in October but has remained above the upper end of the RBI's 2-6% tolerance zone all year, the Reserve Bank of India (RBI) is widely quoted raising its key lending rate by 35 basis points on Wednesday, according to a Reuters poll, but markets will be looking to the central bank's outlook on growth and prices for direction.Global crude oil prices have been declining in recent months, but notreflected in domestic prices.Brent crude has fallen in six of the last seven months, at $83 a barrel relative to its record high of $139 in March, according to Indranil Pan, head economist at Yes Bank, and unless pump prices fall, domestic inflation could rise, said Madan Sabnavis, chief economist at Bank of Baroda.According to Madhavi Arora, senior economist at Emkay Global Financial Services, the consumer is still paying the same price and hasn't benefited from falling oil prices.Food inflation has risen higher than predicted due to unseasonal rains, which have stifled prices, and investors expect at least two more rate hikes in the coming cycle, including one on Wednesday.We expect the RBI to be more data-driven and proactive going forward than raising rates preemptively, said Pankaj Pathak, a fixed income fund manager for Quantum AMC.Featured Video Of The DaySensex drops over 500 points, extending losses for the third day in a row.