The Reserve Bank of India's Monetary Policy Committee (MPC) is likely to announce a repo rate hike of 35-50 basis points (bps) in its policy statement on August 5 in a bid to tackle elevated inflation, according to a majority of respondents in a Business Standard poll.
Of the 10 institutions polled, three expected the MPC to straightaway raise the benchmark policy rate by 50 bps; three others predicted an increase of 35 bps. Two institutions gave an estimate of a 35-50-bp hike, while one provided a range of 40-50 bps for policy tightening. One institution said the MPC could opt for a 25-35 bp increase. The median of the poll showed a rate increase of 43 basis points.
The rate-setting panel commenced its current monetary policy tightening cycle on May 4, and has raised the repo rate by total 90 basis points to 4.90 per cent since then.
A rate hike of 25 bps would take the repo rate back to 5.15 per cent the level that prevailed before the national lockdown was imposed to curb the spread of Covid-19 in March 2020.
Given that the Consumer Price Index inflation-the RBI's monetary policy anchor remains well above the central bank's target band of 2-6 per cent, a fresh rate hike on August 5 is being considered a certainty by economists and market participants.
The latest data showed that headline retail inflation was at 7.01 per cent in June, marking the sixth consecutive month when the price gauge was above the RBI's mandated zone. The central bank's medium-term target
This story is from the August 01, 2022 edition of Business Standard.
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This story is from the August 01, 2022 edition of Business Standard.
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