Reserve Bank can hike repo rate to 6% by December, say economists

The RBI rate hike expectations come despite economists predicting a moderation in inflation due to slump in global commodities and easing supply chain bottlenecks

reserve bank of india
After cumulative hikes of 140 basis points in three moves since May, economists pencil in another 35 basis-point hike by the Reserve Bank of India in the September monetary policy review.
Cynthia Li | Bloomberg
2 min read Last Updated : Aug 30 2022 | 1:02 PM IST
Economists see India’s central bank raising interest rates through December, taking the repurchase rate to 6% by the end of this year, the latest Bloomberg survey shows.

After cumulative hikes of 140 basis points in three moves since May, economists pencil in another 35 basis-point hike in the September monetary policy review, and a quarter-percentage point increase in December, bringing the main interest rate to 6%. A previous survey estimated the repo rate to reach 6% by the end of June 2023. 

The rate hike expectations come despite economists predicting a moderation in inflation due to slump in global commodities and easing supply chain bottlenecks. 

Consumer prices are seen easing to 6.6% from 6.76% for the financial year ending March 2023, though still above the central bank’s 2%-6% target range. Wholesale prices are seen easing to 10.95%, before moderating to low single digits in the next fiscal year through March 2024, the survey showed.

Meanwhile, data due Wednesday is likely to show gross domestic product rising 15.3% in the three months to June from a year ago, while gross value-added may rise 14%. The growth, however, may moderate to the sub-6.5% level from July-September quarter onward, weighed down by global concerns, the same survey showed.

“India is not immune to a US recession,” said Teresa John, economist at Nirmal Bang Equities. “Stable domestic fundamentals in terms of strong financial sector and non-financial sector balance sheets, high foreign exchange reserve and some amount of counter-cyclical fiscal policy ahead of elections in FY 2024 will limit the growth slowdown.”

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :Reserve Bank of IndiaIndian EconomyIndia inflationShaktikanta DasRBI PolicyRBI repo raterepo rate

Next Story