even as Reserve Bank of India (RBI) The Monetary Policy Committee meeting is due next week. RBI Governor Shaktikanta Das It has said that in view of the high level of inflation prevailing in the country, the expectation of increase in rates is redundant. While they did not give an idea of how much the rate-setting panel could raise interest rates, experts say the key repo rate May increase by 25-50 basis points (bps).
The six-member Monetary Policy Committee (MPC) is going to meet during June 6-8 to decide on interest rates in the country. The policy decision will be announced on June 8, the last day of the meeting.
Crisil’s Chief Economist DK Joshi expects a 50 basis points hike in the repo rate in the upcoming MPC policy review, while Bank of Baroda Chief Economist Madan Sabnavis said News18.com MPC may decide to increase the rate by 25-35 basis points.
Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities, said: “We expect the RBI to hike the repo rate by 40 bps in the June policy meeting. However, we should be open to a rate hike in the range of 35-50 bps, depending on how the MPC wants to reach the pre-pandemic repo rate of 5.15 per cent or around that mark by the end of August policy. ,
Repo rate (rate at which RBI lends money to commercial banks) is one of the external benchmark mandated by RBI, on the basis of which commercial banks fix interest rates for various loans.
He added that the central bank may increase the cash reserve ratio (CRR) in one of the upcoming policies, but it will depend on how it sees sustainable liquidity in the next few months. CRR is the percentage of cash that banks are required to keep in their reserves compared to their total deposits.
“We expect a further increase of 50 bps in CRR by the end of FY 2023. With the hike in the repo rate, the RBI will also revise its inflation projections, possibly indicating inflation to remain close to 7 per cent for the most part of CY2022. We expect the RBI to continue to focus on inflation and signal its intention to raise rates and normalize liquidity, while not giving up on growth completely given the uneven nature of the recovery,” Rakshit said. Told.
Retail inflation stood at an eight-year high of 7.79 per cent in April, forcing the RBI to hike interest rates in an off-cycle monetary policy in May. In the April MPC meeting, the RBI revised its retail inflation forecast for the current fiscal year 2022-23 to 5.7 per cent, from 4.5 per cent estimated earlier.
Vinod Nair, Head (Research), Geojit Financial Services, said, “The late sell-off indicates a lack of confidence in the domestic market driven by concerns over central bank policy. Investors in the global market await the release of US job data. Rates are expected to be hiked by 25-35 bps by RBI and 50 bps by US Fed.
India Ratings and Research (Ind-Ra) expects retail inflation to hit a nine-year high of 6.9 per cent in FY13, and the RBI will raise the policy rate by at least 75 bps for the rest of FY13.
“The increase may also be 100-125 bps, but it will depend on the incoming data, policy actions by global central banks, global geopolitical situation and its spillover effect. India Economy. The first rate hike by RBI could be of the order of 50 bps in June 2022 policy and 25 bps in October 2022 policy,” the rating agency said.
It also said that with this, the cash reserve ratio may be increased by 50 bps to 5 per cent by the end of FY23.
In a recent interview with CNBC-TV18, RBI Governor Shaktikanta Das said, “Expectation of rate hike is unreasonable. There will be some hike in the repo rate but by how much, I am not sure yet.”
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