Hike rates

RBI to raise rates by 35 basis points at next week’s meeting: report: The Tribune India


PTI

Bombay, July 27

The RBI’s rate-setting panel will opt for a 0.35% hike in the key repo rate when it meets next week, a US brokerage said on Wednesday.

The rise will be accompanied by a shift in policy stance toward “calibrated tightening,” Bofa Securities said in a report released ahead of the Monetary Policy Committee (MPC) resolution expected to be announced on Aug. 5.

Announcement likely on August 5

  • The rise will be accompanied by a shift in policy direction toward “calibrated tightening,” Bofa Securities said in a report released ahead of the monetary policy committee’s resolution expected to be announced Aug. 5.
  • The RBI raised the rate by a cumulative 0.90% in two tightening moves in May and June, in response to soaring headline inflation which has consistently exceeded the upper limit of the central bank’s target for many months .

RBI raised the rate by a cumulative 0.90% in two tightening moves in May and June, in response to soaring headline inflation that has consistently exceeded the upper limit of the central bank’s target for many months.

Referring to political actions since April when RBI introduced the permanent deposit facility, the brokerage said the central bank had effectively raised rates by 1.30%.

“In our base case, we now see the RBI MPC policy repo rate increasing by 0.35% to 5.25% (higher than the pre-pandemic level), with a change in position towards a calibrated tightening from the withdrawal of accommodation,” the report said. The brokerage expects MPC to maintain its forecasts for consumer price inflation (CPI) and real GDP growth for FY23, at 6.7% and 7.2%, respectively.

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