RBI may go for a 25-35 basis points hike in December, say Economists

1 Dec 2022 , 02:01 PM

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is scheduled to meet in December. The rate panel may raise the repurchase rate (repo rate) by roughly 25—35 basis points (bps) during its upcoming meeting from December 5-7, 2022, according to some economists.

“In the forthcoming meeting, we anticipate a 35-bps rate increase. By the conclusion of the fiscal year, Consumer Price Index (CPI) inflation is probably going to further decelerate and fall below 6% “Rajani Sinha, chief economist at CARE Ratings, was quoted as saying by IANS.

The Wholesale Price Index (WPI), which was 16% in May/June, has also dropped significantly, the economist continued, from 16% to about 8%.

There is a likelihood that the US Federal Reserve could slow down its rate increases, which would provide RBI and other central banks some breathing room.

High-frequency economic data like vehicle sales, GST collection, e-way bill, and PMI continue to point to a solid rebound on the growth front. However, Sinha said that other consumption indices, such as IIP consumer durables and non-durables, continue to be subpar.

Furthermore, when the world economy weakens, so does external demand.

Inflation’s escalating speed is beginning to moderate as a result of declining commodity prices and a slowdown in world economic growth.

For feedback and suggestions, write to us at [e-mail]