RBI may opt for moderate rate hike

Tribune News Service

New Delhi, June 7

RBI Governor Shaktikanta Das is likely to announce a second hike in repo rate tomorrow in as many months and it would lead to increase in EMIs of home and auto loans.

On the flip side, the move is one in a series of initiatives being taken by both the government and the RBI to control inflation that has hurt household budgets and savings. The rate of inflation has breached the RBI’s upward tolerance band of 6% and was last recorded at eight-year high of 7.79% in April. Wholesale inflation has also been in double digits for 13 months and was at a record high of 15.08% in April.

Das has already indicated that there will be another hike in the repo rate. In May, the RBI had held an off-cycle meeting of the Monetary Policy Committee (MPC) to hike interest rates by 40 basis points.

“We expect the RBI to hike interest rates anywhere in range of 25-40 bps. The 8.7% growth in FY22 on the low base still shows that domestic demand is feeble as higher inflation has dampened the purchasing power. Meanwhile, the government is also managing inflation by reducing tax on petroleum products and restricting the exports of essential commodities,” said Umesh Revankar of Shriram Finance.

Monetary policy today

RBI Governor Shaktikanta Das will announce the monetary policy tomorrow. The expected rate hike may be moderate and is not going to be 50 basis points as some experts have been advocating.

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Tribune News Service

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