RBI tipped to hold rates

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MUMBAI, Dec 14 (AFP): India's central bank is likely to keep interest rates on hold this week, analysts and economists said, as policymakers prepare to meet amid fresh signs of a slowdown in the fast-growing economy. The Reserve Bank of India (RBI) is due to review monetary policy Friday, having said in October that the likelihood of another hike in rates was "relatively low". The RBI's repo rate, at which it lends to commercial banks, is at a near three-year high of 8.50 per cent. The reverse repo rate that it pays banks for deposits is at 7.50 per cent-its highest in more than a decade. Governor Duvvuri Subbarao maintains that the succession of 13 rises since March last year was designed to tame spiralling inflation running at nearly 10 per cent, even if it means that short-term growth takes a hit. But predictions of a softening of the bank's hawkish stance have grown amid fears that meeting even the government's revised growth target of 7.5 per cent this year may be optimistic in the current economic climate. Business leaders have been at the vanguard of calls for a cut in interest rates or a pause in hikes to boost flagging investor confidence and re-energise growth. Both the Federation of Indian Chambers of Commerce and Industry (FICC) and the Confederation of Indian Industry (CII) renewed their call for prompt action after the latest industrial output figures were announced Monday.