RBI Governor Shaktikanta Das-led Monetary Policy Committee is all set to reveal what's in store for the economy at the end of three-day deliberations on Friday. The scheduled policy review comes amid concerns around sticky inflation, lifetime lows in the rupee and slowing global growth.
Economists in a CNBC-TV18 poll expect the central bank to announce a hike of 50 basis points in the repo rate — or the key rate at which the RBI lends short-term funds to commercial banks — on September 30.
“50 basis points is what we are expecting. In the last one week or so, a lot has changed. Earlier, we were expecting 35 basis points, but over the last 7-8 days since the FOMC (announcing a hike in the US interest rates by 75 basis points), there has been dramatic volatility in the global markets and that is adverse for emerging market currencies,” Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank, told CNBC-TV18.
She expects a reasonably hawkish guidance and "some kind of a tweak" to the stance. In its August policy, the RBI had implied its intent to remain focused on withdrawal of accommodation.
The RBI has since May increased the repo rate by a total of 140 basis points over three revisions.
“For this particular meeting itself, there is no real room given the fact that inflation is still around seven percent and is likely to remain around there in September. At the moment, the RBI can continue to sound hawkish," said Rahul Bajoria, Chief India Economist at Barclays.
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Can more rate hikes be expected?
Bhardwaj sees room for more hikes after a September 30 increase. However, Bajoria believes that a rate hike on September 30 could be the last in the current cycle citing inflation.
"Inflation according to our projections could come back within the band in the Q4 of 2022 itself. This should allow the RBI to take a step back and think about the growth inflation trade-off going forward,” he said.
(Edited by : Nishtha Pandey)
First Published: Sept 28, 2022 8:39 PM IST
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