Economists expect RBI to hike rates by 0.25%
Economists expect the Reserve Bank to hike its key short-term lending and borrowing rates on July 27 to tame rising inflation, which is already in double-digits.
The Opposition has mounted pressure on the government to rollback fuel prices and curb inflation, but economists said the RBI’s expected move will not be guided by the NDA and Left-sponsored Bharat Bandh on Monday.
They, in fact, favoured the government’s move to hike petroleum prices.
“The idea is to moderate economic growth by raising interest rates and thereby control inflationary expectations. I don’t think that due to the protests by the Opposition, RBI will be forced to hike its rates faster,” Crisil chief economist, Mr D. K. Joshi, said.
Axis Bank chief economist, Mr Saugata Bhatta-charya, also said, “Our sense is that there will be 25 basis points hike in both repo and reverse repo rates on July 27. They will not do anything to CRR. By that time, liquidity will be less restrictive... it would have eased significantly. So, they will not touch the Cash Reserve Ratio (CRR).”
Economic think-tank ICRIER director, Mr Rajiv Kumar, said he expects the RBI to increase the repo (short-term lending) and reverse repo (borrowing) rates by another 25 basis points each in its July review. — PTI
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