RBI monetary policy review: Further repo rate hikes clearly on the cards

The Governor's reminder that the repo rate is still below the pre-pandemic level served as a clear signal that more rate hikes lie ahead

A repo rate hike in the June 2022 policy review was a foregone conclusion after the unexpected, off-cycle rate hike of 40 basis points (bps) in May 2022, and an inflamed consumer price index-based (CPI) inflation print of 7.8 per cent for April 2022. The uncertainty was only how big the hike would be, with forecasts varying from 25-50 bps.

At Icra, we had anticipated that the Monetary Policy Committee (MPC) would raise the repo rate by 40 bps in the June 2022 policy review, in line with the magnitude of the increase seen