In the next meeting scheduled between June 6-8, 2022, the Reserve Bank of India (RBI) may introduce another hike to us. As per a Reuters poll, the majority of analysts who have already experienced the surprise hike in May also suggest the same for next month. Our country’s retail inflation rate has bumped up to an eight-year high in April.
RBI Taming The Surging Inflation
The immediate surge in Inflation has forced RBI to modify the constant repo rates, likely to tame the hiked inflation. It is expected that this year RBI can take the repo rates to their pre-COVID levels which are currently at 4.40 per cent.
Analysts Suggest About Hike
As per the Reuters poll results, 14 out of 53 analysts suggest that RBI can hike lending rates by 0.35 per cent. Or 35 basis points taking it to 4.75 per cent next month. On the other hand, 20 of them suggested that RBI can play a bigger move and can hike the rates by 40-75 basis points, and 10 out of them pointed out that a hike of 50 basis points is coming next month. According to Reuters sources, the RBI is going to ascend the inflation projection for the current financial year.
Forecasters that were eagerly waiting for the RBI’s decision were completely surprised by the repo rate hike of 40 basis points on May 4, they don’t even have a clear vision of what was coming with the next RBI move.
Senior Economist at Kotak Mahindra Bank, Upasna Bhardwaj said, “We need to see the second act…in June to get a grip of exactly what is the scale of policy normalisation that we can expect and the pace as well.”
Well, the economist is expecting a 35 basis point hike which will result in a 4.75 per cent repo rate.
On the other hand, she also said, “markets are clear on one account, that there is going to be aggressive policy rate hikes because inflation is the biggest threat at this point.”