Deutsche Bank expects RBI to decrease the tempo of interest rate hikes

23 Aug 2022 , 07:56 AM

According to a Monday report from Deutsche Bank, the Reserve Bank’s rate-setting panel is likely to decide to reduce the pace of hikes and raise the repo rate by 0.25% in September.

Since May of this year, the central bank has increased the repo rate three times in a row by 1.40% in reaction to the uncomfortably high inflation that has been routinely exceeding the upper limit of the tolerance band of the RBI.

The RBI will respond with a slower pace of rate increases moving forward, according to a report from a bank located in Germany. The estimate was based on newly disclosed minutes from the Monetary Policy Committee’s most recent meeting (MPC).

It cited Governor Shaktikanta Das’ declaration, in which he said that one of the most crucial element will be that activities will be “calibrated, measured, and agile.”

Rajiv Ranjan, executive director of the RBI and a member of the MPC, predicts a similar outcome, according to the report.

The RBI has historically increased the repo rate twice, once in the first fiscal year (FY11) to bring it to 6.75% and again in the second fiscal year (FY12) to bring it to 8.50%.