The Reserve Bank of India or RBI is certain to go for another hike in its repo rate, as a poll conducted by ET highlighted. However, the exact figure is uncertain as ascend or descent depends on various factors like crude oil prices in the international market, Government taxation and transport charges, how monsoon affects the food-grain output, etc.
Expected Repo Rate
RBI dealing with the current inflation rate can increase the repo rate by 25-50 bps which will take the lending rates to 4.9 per cent from the current 4.4 per cent, as per poll suggests. During the polling, half of the participants including bankers, fund managers, financial analysts, and heads of institutions through the polls forecasted a hike of 50 bps. On the other hand rest of them forecasted a hike between 25 to 40 bps.
After the certain decision to increase the rate and liquidity in May, RBI can consider doubling its efforts to tame the inflations by increasing Cash Reserve Ratio or CRR too. CRR is a bank’s proportion of cash deposits within RBI.
Also read:
Govt Approves 8.1 Percent Interest Rate On EPF Deposits, Credit Soon
Monetary Policy Committee of India’s Decision Due On Wednesday
The rate hike is certain, and investors will be keenly watching the forecast on the inflation rate, as RBI will also guide on the latest inflation figure on Wednesday which the central bank is managing to recover through higher investments.
The Monetary Policy Committee may ascend the inflation figures, and slash down the growth expectations. But happening the same would certainly depend upon the Government’s ability to manage the taxes to keep the inflation prices steady. “To strike a right balance between sluggish growth and expected moderation in inflation, the pace of rate hikes should be calibrated especially after the Centre’s excise duty cuts, “ said A Balasubramanian, Aditya Birla.
“Aggressive rate hikes are unlikely to come. Also, the prospect of a good monsoon will start influencing consumer prices.” further said.
