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RBI likely to slow down pace of rate hikes
August 23, 2022
The Reserve Bank’s rate setting panel is likely to opt for slowing down the pace of hikes and increase the repo rate by 0.25 per cent in September, Deutsche Bank said on Monday.
The central bank has already hiked the repo rate by 1.40 per cent in three consecutive actions since May this year, in response to the uncomfortably high inflation which has been consistently breaching upper end of the tolerance band set by the government to the RBI.
In a report, the Germany-based bank said the RBI will respond with a slower pace of rate hikes from here, basing the expectation on the recently released minutes of the last meeting of the Monetary Policy Committee (MPC).
It pointed to Governor Shaktikanta Das’ statement, where he wrote that actions will be “calibrated, measured and nimble” as one of the most important factors.
RBI’s executive director Rajiv Ranjan, who is also a member of the MPC, suggests a similar outcome, the report said.
“The frontloading of policy actions is expected to strengthen monetary policy credibility and temper the need for aggressive rate hikes in future,” Ranjan said in his statement, as per the report.
Deputy Governor Michael Patra also hints at similar measure, the bank said.
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