The Bank of England is expected to hike interest rates to their highest level for nearly a decade on Thursday.
Replying to a question, Valecha said it is cheaper to get a loan in the UAE than in India despite this hike, although the US Federal Reserve is supposed to raise rates much more aggressively than the RBI.
"Uncertainty around domestic inflation needs to be carefully monitored in the coming months", the central bank said while increasing its inflation projection.
"Scotland's growth over the last three years has lagged behind the United Kingdom, so whilst the Bank may judge that the United Kingdom economy is in sufficiently robust health to cope with a rate hike, a rate rise in Scotland may be more of a challenge". In its last revision, on August 2, 2017, rates were cut by 25 basis points to 6 per cent.
The Bank's Monetary Policy Committee agreed unanimously to increase the base rate from 0.5 to 0.75 per cent, adding around £190 a year to the average variable-rate mortgage.
"RBI's action to hike the repo rate by another 25 bps today might result in a marginal increase in lending rates for corporate borrowers with a lag", said Dhaval Kapadia, director, portfolio specialist, Morningstar Investment Adviser India. "Three MPC members had dissented at the last BoE meeting, including Chief Economist Andrew Haldane, and key data releases since June, such as a healthy labour market report, will have strengthened the resolve of other Committee members".
A sustained rise in interest rates is bad for corporates.
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Given that a rate hike is nearly a foregone conclusion, other parts of the MPC's decisions, and the minutes of the meeting are likely to provide more intrigue.
He added that the banks have done the "stockpiling" and the country's financial system is in a position to be able to "withstand a shock" which could result from the United Kingdom leaving the European Union without an agreement. For the second quarter ended September, it has projected inflation to be at 4.6 per cent.
Fuel prices are still high: Crude oil price has moderated but there's no certainty on where it's headed.
If financial market expectations are met, Britain's central bank should raise rates from 0.5% to 0.75%, taking the UK's base rate of interest to its highest level since March 2009. Five of the six members on the rate panel voted in favour of a rate increase.
The central bank said inflation in two years' time was likely to be 2.09 percent, above the BoE's 2 percent target.
The rate hike comes on back of rising retail inflation concerns. Economy is doing fine: Expected GDP growth rate of 7.4 per cent for the year is a sign of a strong economy.
Providers hold government bonds to create the returns they need to pay their clients.
Clouding the outlook for the United Kingdom central bank is Britain's looming withdrawal from the European Union.