RBI RATE PANEL BEGINS REVIEW OF COUNTRY’S MONEY POLICY

Mumbai, Dec. 5: The Reserve Bank’s rate-setting panel on Monday started brainstorming for the next round of monetary policy amid expectations of a moderate interest rate hike of 25-35 basis points as inflation has started showing signs of easing and economic growth tapering.

The RBI has hiked key benchmark lending rate by 50 basis points (bps) thrice since June over and above an off-cycle 40 bps increase in repo in May.

RBI Governor Shaktikanta Das would be announcing the bi-monthly monetary policy on Wednesday (December 7) on the conclusion of the threeday Monetary Policy Committee (MPC) meet.

India’s largest lender State Bank of India in a research report authored by Group Chief Economic Adviser Soumya Kanti Ghosh on Monday said: “We expect the RBI to hike rates in smaller magnitude in December policy attuned to emerging market central banks and the overall rate setting tone. A 35-bps repo rate hike looks imminent. We believe at 6.25 per cent, it could be the terminal rate for now”.

The current policy repo rate is 5.9 per cent.

Several other experts too expect the rate hike to be in the range of 25-35 basis points on Wednesday.

On September 30, the RBI had hiked the key policy rate (repo) by 50 basis points with an aim to check inflation.

It was the third successive hike of 50 bps. Before the September hike, the central bank had raised the repo rate by 50 bps each in June and August, and 40 bps in May.

Retail inflation, which the RBI factors in while arriving at its monetary policy, is showing signs of moderation but still remains above the RBI’s upper tolerance since January this year.