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in May and 50 bps each in June, August and September. The current policy repo rate is 5.9 per cent.
Read also: RBI Monetary Policy Committee meeting live: When, where and how to watch Shaktikanta Das’ address
The rate-setting panel of the Reserve Bank is likely to go for a modest interest rate hike of 25-35 basis points as inflation starts to show signs of easing and economic growth decelerates.
India’s largest lender State Bank of India in a research report authored by Soumya Kanti Ghosh, the group’s chief economic advisor, said on Monday: “We expect the RBI to keep rates in line with emerging markets central banks and overall rate-setting in the December policy.” Sure. A 35 bps hike in the repo rate looks imminent. We believe that at 6.25 per cent this could be the final rate for now.
Consumer Price Index (CPI)-based retail inflation, which is primarily taken into account by the RBI while formulating its monetary policy, is showing signs of moderation, but it is still above the central bank’s upper tolerance of 6 per cent since January this year. above level.
Inflation eased to 6.77 per cent in October from 7.41 per cent in the previous month, mainly due to lower prices in the food basket, though it remained above the Reserve Bank’s comfort level for the 10th consecutive month.
GDP growth slowed to 6.3 per cent in the second quarter of the fiscal from 13.5 per cent growth in the previous three months.
Most economists and analysts expect the rate hike to continue, but with a lesser magnitude than the earlier 50 basis points. Industry body Assocham, in its letter to RBI Governor Shaktikanta Das, has also urged for a modest hike in interest rates to ensure that rising cost of borrowing does not adversely affect the nascent economic recovery.
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