Warm-Up: RBI MPC Recap, Investing.com’s Rate Hike Forecast & Inflation Scenario

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Warm-Up: RBI MPC Recap, Investing.com’s Rate Hike Forecast & Inflation Scenario
Credit: © Reuters.

By Malvika Gurung

Investing.com -- The RBI Monetary Policy Committee’s three-day meeting that began on Dec 5, 2022, has culminated and the bi-monthly policy review is scheduled to release on Wednesday, Dec 7.

While the market broadly expects the central bank’s rate-setting panel to hike the benchmark lending rate in the range of 25-35 basis points on Wednesday, Investing.com forecasts a 35 bps rate hike, taking the key policy rate to 6.25% from 5.9%.

RBI has hiked the repo rate by as much as 190 basis points since May, in attempts to tame soaring inflation that has been staying above the central bank’s upper tolerance limit for over three quarters now.

Economists at UBS believe the MPC to raise the repo rate by 25-25 bps with data to be dependent upon Fed action, inflation trajectory and financial stability. As per a poll by Reuters, the committee is likely to undertake a smaller rate hike by 35 basis points. RBI has been hiking interest rates by 50 bps for the last three times.

India’s retail inflation declined sharply to 6.77% in Oct to a 3-month low, mainly due to easing food prices, yet remaining above RBI’s tolerance band of 2-6% for the 10th consecutive month.

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