RBI may hike repo rate by 25-50 basis points
June 08, 2022 10:01
Amid rising inflation concerns in the economy, all eyes are on today's Monetary Policy Meeting outcome as experts believe that the Reserve Bank of India (RBI) is likely to increase the repo rate by 25 to 50 basis points (BPS).
RBI will announce the credit policy at 10 am today. Last month, the central bank raised the repo rate or short term lending rate by 40 basis points in an off-cycle monetary policy review to check spiralling inflation.
It was the first increase in the policy repo rate in nearly two years.
The repo rate is the interest rate at which the central bank lends short-term funds to banks. India's largest bank, State Bank of India (SBI) in its research report has said that might keep the following challenges in mind while deciding its policy.
Uncertainty around the evolution of the pandemic continues to prevail.
The emergence of monkeypox adds further to a layer of uncertainty. Geopolitical tension to increase in coming months as high crude prices impacts growth. By 2022 so far, more than 45 central banks across AEs and EMEs have raised policy interest rates and/or scaled back liquidity, with many central banks hiking interest rates in back-to-back policies.
SBI's view is that RBI may increase the repo rate by 50 bps and keep its stance accommodative.
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