RBI may hike rates by 50 bps in coming months:

India is likely to face supply side constrains and hence food inflation may not come down in a hurry.

In line with the market expectations, RBI has hiked the Repo Rate and the Reverse Repo Rate by 25 basis points each and has also revised upward inflation target to 8% from earlier year-end expectation of 7%.

India is likely to face supply side constrains and hence food inflation may not come down in a hurry. Global oil & commodity prices, which have remained high for some time have started seeping into core inflation and manufacturing inflation has moved up from 3.8% in January 2011 to 4.9% in February 2011.

With high inflation, real interest rates have remained negative and we expect that RBI would continue to hike rates as least by 50 bps more in the coming months in a phased manner.

Aneesh Srivastava, Chief Investment Officer, IDBI Federal Life Insurnace Company Limited