RBI likely to raise policy rate by 35-50 basis points

AGENCIES CHENNAI, 29 SEPTEMBER

The Reserve Bank of India's RBI) Monetary Policy Committee MPC) is expected to raise the policy rate ranging between 35 to 50 basis points bps) on Friday, experts believe.

The experts also point out that the rate revision by the US Federal Reserve and the central banks of many other countries have taken an aggressive stance on the rate revision.

In a report Emkay Global Financial Services said: Clearly, central bankers globally are confronting the classic trilemma' of international finance: one cannot have as table currency, unfettered capital flows, and independent monetary policy all at the same time."

"In the upcoming credit policy of RBI which is scheduled on Sep 30, 2022, we expect MPC to raise repo rate by another 50bps. We expect rates to increase up till 6-6.25 per cent," said Sonal Bandan, economist with Bank of Baroda.

In its recent report, Bank of Baroda said significant risks have emerged for growth and inflation forecasts.

"While risks to growth are driven by slowdown in global growth, risks to inflation are more domestic in nature. Deficient/untimely rain is estimated to have impacted output of rice and pulses," Bandan said. The other developments that the RBI would consider are volatility in the currency and bonds market, Bandan said.