RBI set to increase interest rates by another 50-60 bps in 2022


New Delhi, Aug 23 (IANS): The minutes of the August 22 Monetary Policy Committee of the RBI highlights that inflation continues to remain the key concern for the MPC members despite a deceleration in the overall price momentum after a peak of 7.8 per cent recorded in April, Acuite Ratings said in a note.

From the policy perspective, there is a clear need felt to frontload rate hikes in tandem with global central banks but at the same time, the pace of the residual hike will also depend on the inflation print over the next few months. The rate action is likely to be accompanied by calibrated withdrawal of money market core liquidity surplus.

Suman Chowdhury, Chief Analytical Officer, Acuite Ratings & Research, said: "MPC minutes indicate that another 50-60 bps of a rate hike should be expected in the forthcoming policy announcements irrespective of the moderation in the inflation trajectory. The likelihood of the Q2FY23 CPI inflation print dropping to less than 6.0 per cent is low, particularly given the pickup in the services sector. What is encouraging to note is the declining inflationary expectations of households which reflects the effectiveness of both the monetary and the fiscal policy actions till now; it will also help in strengthening medium-term growth prospects."

On the growth front, all members agreed that India's economic recovery has remained broadly resilient despite the slowdown in the global growth scenario.

The members concurred that India has fared better than many of the other economies under the pandemic and Ukraine war shocks.

Going forward, the pick-up in SW monsoon after initial hiccups, a strong rebound in the contact-intensive services sector, and robust government expenditure is expected to keep the growth trajectory healthy.

 

  

Top Stories


Leave a Comment

Title: RBI set to increase interest rates by another 50-60 bps in 2022



You have 2000 characters left.

Disclaimer:

Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. Daijiworld.com will not be responsible for any defamatory message posted under this article.

Please note that sending false messages to insult, defame, intimidate, mislead or deceive people or to intentionally cause public disorder is punishable under law. It is obligatory on Daijiworld to provide the IP address and other details of senders of such comments, to the authority concerned upon request.

Hence, sending offensive comments using daijiworld will be purely at your own risk, and in no way will Daijiworld.com be held responsible.