RBI is likely to hike its repo rate by 25 bps when it meets tomorrow as concerns over slowdown in growth both globally and in India will weigh on RBI’s decision. It is likely to follow this up with two more rate hikes of 25 bps each in August and September before taking its foot off the rate hiking pedal and pausing to assess the impact of past tightening measures on inflation.
We can still expect another 75 bps rate hike this year (including 25 bps on Thursday) and do not expect RBI to pause unless FY12 growth tracks 7% or inflation tracks RBI’s trajectory of 6% by March - assuming pass-through of high crude oil prices.
We can still expect another 75 bps rate hike this year (including 25 bps on Thursday) and do not expect RBI to pause unless FY12 growth tracks 7% or inflation tracks RBI’s trajectory of 6% by March - assuming pass-through of high crude oil prices.
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