Advertisement
trendingNowenglish2590604https://zeenews.india.com/economy/rbi-likely-to-hike-benchmark-interest-rate-by-25-bps-on-apr-6-2590604.html

RBI Likely To Hike Benchmark Interest Rate By 25 bps On Apr 6

The Reserve Bank of India (RBI) has already increased the repo rate by a total of 250 basis points since May.

RBI Likely To Hike Benchmark Interest Rate By 25 bps On Apr 6 File Photo

New Delhi: Under pressure to bring down retail inflation and keep pace with global peers, the Reserve Bank may go in for a 25 basis points hike in benchmark interest rate, probably the last in the current monetary tightening cycle that began in May 2022, at the bi-monthly policy to be unveiled on Thursday.

The Monetary Policy Committee (MPC) of the Reserve Bank will be meeting for three days on April 3, 5, and 6 to take into account various domestic and global factors before coming out with the first bi-monthly monetary policy for fiscal 2023-24. (Also Read: Latest Bank Fixed Deposit Rates 2023: ICICI vs HDFC vs PNB FD Rate Compared)

The Reserve Bank of India (RBI) has already increased the repo rate by a total of 250 basis points since May in a bid to contain inflation though it has continued to remain above the central bank's comfort zone of 6 percent for most of the time. (Also Read: 

The two key factors which the RBI Governor headed committee will deliberate intensely while firming up the next monetary policy are -- elevated retail inflation and the recent action taken by central banks of developed nations especially the US Federal Reserve, the European Central Bank, and Bank of England.

Having remained below six percent for two months (November and December 2022), the retail inflation breached the comfort zone warranting action by the Reserve Bank.
The Consumer Price Index (CPI)-based inflation was 6.52 percent in January and 6.44 percent in February.

"I am leaning towards a further and final 0.25 percentage point hike in rates," Chief Economist at Axis Bank Saugata Bhattacharya recently told reporters, adding that the hike will tame the stubbornly high core inflation.

He also said the slowdown in growth visible in anecdotal evidence at present, coupled with some cool-down in inflation, should prompt the six-member Monetary Policy Committee to cut rates by the end of the third quarter of FY24.

"Given that CPI inflation has been 6.5 percent and 6.4 percent in the last two months and that liquidity is now near neutral, we may expect the RBI to raise rates once again by 25 bps and probably change stance to neutral to signal that this cycle is over," Madan Sabnavis, Chief Economist, Bank of Baroda had said recently.

In all, the Reserve Bank will hold six MPC meetings in fiscal 2023-24. The central government has tasked the RBI to ensure that retail inflation remains at 4 percent with a margin of 2 percent on either side.

Stay informed on all the latest news, real-time breaking news updates, and follow all the important headlines in india news and world News on Zee News.

NEWS ON ONE CLICK