The Reserve Bank of India (RBI) will announce its next bi-monthly policy review on December 7 at the end of the three-day meeting of the Monetary Policy Committee (MPC) starting today. After three consecutive hikes of 50 basis points, the RBI is expected to slow the pace of monetary tightening in this policy. The meeting will be headed by RBI Governor Shaktikanta Das.
As per the poll taken by “Economic Times”, nine out of ten banks expect that the central bank is widely expected to opt for a lower rate hike of 35-50 bps (basis points) in interest rates, along with a change in policy stance from “withdrawal of accommodation” to “neutral”.
Meanwhile five of the nine forecast a rate increase of 35 bps, two expect it will be in a range of 25-35 bps, another two project a 25 bps hike. The only prediction outside this is for the RBI to continue with a half-percentage-point increase this time as well.
Kaushik Das, Deutsche Bank’s chief India economist commented, “With the Fed indicating its desire to slow down the pace of rate hikes to 50 bps clips and the October US CPI momentum easing relative to expectations, thereby reducing the depreciation pressure on the rupee, we think the MPC will be comfortable to dial down the pace of rate hikes to 35 bps this month.”
In the last MPC meeting on September 30, the RBI hiked the repo rate by 50 basis points to 5.40% to tackle uncomfortably high inflation level. Consequently, the standing deposit facility (SDF) rate was adjusted to 5.65% and the MSF (marginal standing facility) rate and the bank rate to 6.15%. The board panel also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting the growth as well.
According to the figures released last week, India’s gross domestic product expansion for the July-September quarter slowed to 6.3%, from 8.4% a year earlier and 13.5% in the previous quarter, owing to slower growth of the manufacturing and mining sectors. Economists expect India’s growth to slow down further with Nomura projecting it at 4.7% in 2023 against an expected 6.8% increase this year.
For feedback and suggestions, write to us at editorial@iifl.com
IIFL Customer Care Number 
IIFL Capital Services Support WhatsApp Number
