Mark Mobius says increasing rates now would be a big mistake by RBI

The report said that headline inflation is at the highest level in five months and above the 4 percent midpoint of the central bank’s target band, while core inflation -- which strips out food and fuel -- has climbed above 6 percent. But Mobius reportedly said that various Indian states are facing problems and a cut in borrowing costs is what’s needed to boost investments.

Veteran emerging markets investor Mark Mobius has said that the Reserve Bank of India (RBI) will make a “big mistake” if it raises interest rates this week, a Bloomberg report said today, adding "his view goes against the crowd."

According to the report, most economists in a Bloomberg News survey expect the Reserve Bank of India to raise the repo rate by 25 basis points on August 1, a second hike in eight weeks.

The six-member monetary policy committee headed by Governor Urjit Patel today began its three day meet today.

The report said that headline inflation is at the highest level in five months and above the 4 percent midpoint of the central bank’s target band, while core inflation -- which strips out food and fuel -- has climbed above 6 percent. But Mobius reportedly said that various Indian states are facing problems and a cut in borrowing costs is what’s needed to boost investments.

“I think they should lower interest rates in India, not raise them because you have many states with different economic situations all over the country,” Mobius, partner and co-founder of Mobius Capital Partners, told Bloomberg TV in Hong Kong.

Watch this Zee Business video