RBI may hike rates due to inflation

The Reserve Bank on Friday said the option of going for another round of rate hike at its next mid-quarterly policy review in September do exist as inflationary pressure continues in the economy.

"Probability is always there," RBI Deputy Governor K C Chakrabarty said when asked whether another rate hike was possible as inflation is still ruling over 9 per cent.

He was speaking on the sidelines of the diamond jubilee celebration of the Reserve Bank employees' sports club.

Chakrabarty said the short-term target is to bring down headline inflation to 6-7 per cent and further ease it to 3-4 per cent in the medium-to-long term.

When asked if the RBI is equipped to supervise micro finance sector if asked by the government, he said, "If we are not equipped, then we have to improve our capacity (to do so). Let the bill be first approved".

On banks not giving loans to the MFI sector, Chakrabarty said, "We cannot force them but we are asking them".