Rate talk swirls ahead of RBI,FM meet

RBI's next scheduled policy review is in Jan,but it can change policy settings at any time.

Reserve Bank of India (RBI) Governor Duvvuri Subbarao will meet Finance Minister Pranab Mukherjee on Friday evening,sources said,amid speculation the bank would tighten monetary policy to help stem rising prices.

The meeting is due to start at 4:15 p.m. (1045 GMT) and while it is not unusual for the two officials to discuss the economy,analysts said the meeting could be a prelude to an earlier-than-expected interest rate rise.

The yield on the 10-year benchmark bond rose to 7.70 per cent,matching a 13 -month high hit on Dec. 11. It had ended at 7.64 per cent on Thursday.

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“Inflation could be on the agenda,” said a government official,who asked to remain anonymous. Data released on Thursday showed that food prices surged an annual 20 per cent in early December,reinforcing market views a tightening was coming.

The RBI’s next scheduled policy review is at the end of January,but it can change policy settings at any time. Of the six cuts in the repo rate between Oct 2008 and April,only the last came at a scheduled review.