Hike rates

RBI expected to hike rates in April, support Indian rupee – Reuters poll

The majority of economists polled by Reuters said they expected the Reserve Bank of India (RBI) to hike the repo rate for the second time this year to 4.50%, boosting sentiment around the Indian rupee.

Additional Results

“RBI will raise the repo rate by 25 basis points at the April meeting, 17 of 32 economists said.”

“Of the remaining 15, 13 were almost split between June and August. While only one economist said it would happen early this month, the other said in October this year.

About half of economists responding to an additional question, 15 out of 31, said the fight against high inflation would guide its moves.

“Another 12, or 39% of respondents, said they were catching up with the Fed. The rest said the RBI would tighten its policy to support the rupee.

“Inflation is expected to remain below the RBI’s 6% upper tolerance limit until at least 2024, according to the survey, but the trend above the medium-term target of 4%.”

“When asked if the RBI was behind on its monetary policy strategy, 19 out of 29 said no, while the rest said yes.

Market reaction

Meanwhile, USD/INR is bouncing back near the 74.60 region, currently trading at 74.73, up 0.11% so far. The spot tracks the rebound in the US Dollar amid mixed market sentiment and the pace of the NFP.

Trading activity remains limited in the cross as Indian bond markets are closed on a public holiday in the state of Maharashtra on Monday to mourn the death of Bollywood singer Lata Mangeshkar.

The RBI has postponed its monetary policy committee meeting by one day to Feb. 8-10, it said in a statement on Sunday.