RBI Monetary Policy: RBI may increase the repo rate marginally, may be announced on December 7

New Delhi. In view of the signs of softening in retail inflation and the need to boost growth, RBI may take a soft stance on increasing rates in its upcoming Monetary Policy Review on Wednesday. Experts estimate that after increasing the interest rates by 0.50 per cent for three consecutive times, now RBI can increase the interest rates by 0.25 to 0.35 per cent this time.

MPC meeting will be held from 5 to 7 December
The meeting of the Monetary Policy Committee (MPC) is starting from 5 December. The results of the three-day meeting will be announced on December 7.

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1.90 percent increase in the repo rate since May
According to news agency PTI, apart from domestic factors, the MPC may follow the US Federal Reserve, which has indicated a slight increase in rates at the end of this month. The Reserve Bank has increased the repo rate by 1.90 per cent since May this year. However, despite this, inflation has remained above a satisfactory level of 6 per cent since January.

Repo rate may reach 6.5 percent in this financial year
Bank of Baroda’s Chief Economist Madan Sabnavis said, “We believe that the MPC will increase rates this time as well.” However, this increase will be from 0.25 to 0.35 percent only. It is estimated that the repo rate will reach 6.5 per cent in this financial year. This means that there will be another increase in the repo rate in February.

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The Consumer Price Index (CPI) is primarily taken into account by the RBI while deciding the monetary policy. CPI is showing some signs of moderation but it is still above the satisfactory level of the central bank.

Inflation expected to decline further
DK Pant, chief economist at India Ratings and Research, said, “Inflation is expected to decline further. However, it will remain above 6 per cent in this quarter. We believe that RBI may increase the repo rate by 0.25 percent in the December 2022 monetary policy review.

Possible increase of 0.25 to 0.35 percent
Shanti Ekambaram, Whole Time Director, Kotak Mahindra Bank, said that in view of the soft stance of the Federal Reserve and some reduction in inflation, RBI and MPC will also increase the rates a little less i.e. 0.25 to 0.35 percent.

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