What experts say about the hike in repo rate by RBI till December 2022.
Upasana Bhardwaj, Chief Economist: The decisions of the MPC have been in line with our expectations. Given the growing external sector imbalances and global uncertainties, the need for front-loaded action was imperative. We will continue to see 5.75% repo rate till December 2022.
Abheek Barua, Chief Economist and Executive Vice President: Unlike previous policies, the central bank also focused on external balance flexibility, which not only communicated its preference for a less volatile rupee, but also some resistance to the rupee’s very sharp depreciation levels. We expect the RBI to continue with its rate hikes in the coming policies and increase rates by up to 5.75% by the end of the year.
Garima Kapoor, Economist, Elara Capital: After today’s policy, we expect a further 25 basis points increase in the policy rate and expect the MPC to rely on data while it assesses the impact of the recent hike on inflation.
Indranil Pan – Chief Economist, Yes Bank We expect the RBI to start focusing on less aggressive policy moves ahead, in line with comments from global central banks. We will continue to increase by 25-35 bps for September and 25 bps for December.
Churchill Bhatt, Executive Vice President, Debt Investments, Life Insurance Company: Going forward, the MPC assured the markets of its ability to give a soft landing for the economy while keeping inflationary pressures at bay. Given the backdrop of the global slowdown and its accompanying deflationary impact, we believe policy rates in India will ease below 6% this calendar year. In light of the same, further rate operations will be more calibrated and data dependent.
Amar Ambani, Head – Institutional Equities Head, Yes Securities We see that the central bank, in its effort to control inflation, has done rate hikes (140 bps since May) in the last 3 months, while the excess liquidity in the banking system has eroded substantially. Having said that, we see RBI giving another rate hike in October, perhaps a modest one (25bps) to ensure that price pressures remain under control during Q3 FY23. We see that the repo rate is around 5.7-6.0%.
Vikas Garg, Head of Fixed Income, Invesco Mutual FundContinuing with the “return of housing” indicates more rate hikes as a healthy economy provides space. Overall, policy more stringent than recent market expectations reiterates the need to stabilize inflation expectations.
Sameer Kaul – MD & CEO, TrustPlutus Wealth: As expected, the RBI has increased them by fifty bps, keeping them in line with other central banks. Until inflation is brought under control, we believe the bias remains in favor of higher rates.