India expected to raise interest rates

Analysts expect India's central bank to raise interest rates again this week as inflation continues to batter the Indian economy — widening the gap between hand and mouth for some 700 million poor people.

Most observers expect an increase of 25 basis points when the Reserve Bank of India reviews monetary policy June 16, but there's a slim chance that the bank will leave rates steady, as there has been a slowdown in growth and investment, the Indian Express reported.

The current benchmark repurchase, or repo rate, at which the bank lends to commercial banks, is 7.25 percent while the reverse repo, paid to banks for deposits, is 6.25 percent.

Already facing inflation of 11.5 percent, Indian consumers can expect to face a further increase in prices over the next quarter and the next year, a recent RBI survey said. It expects inflation to increase to 11.9 percent over the next three months and rise to 12.7 percent over the next year.

Which means a rate increase is almost certainly on the cards.