The Reserve Bank of India is likely to increase rates in a smaller amount starting today . A 35 basis points repo rate hike seems imminent and is the new normal, SBI Research says .
New Delhi (India), December 5 : According to SBI Research's latest Ecowrap study, the Reserve Bank of India is likely to increase rates in a smaller amount starting today, attuned to other emerging market central banks, and that a 35 basis points repo rate hike seems imminent and is the new normal, according to the study.Financial markets will be paying close attention to the committee's rate hike, if any, because inflation is still above the 6 per cent target area in November, according to the study.The good news is that liquidity could be offered by a rupee injection in lieu of $ purchases building up RBI reserves, the central bank said.Domestic retail inflation has been hovering above the RBI's upper tolerance threshold for over three quarters now.Retail inflation stood at 6.77 percent in October, down from 7.41 percent the year before.
The RBI is deemed to have failed in directing price increases if the CPI-based inflation is outside the 2-6 percent range for three quarters in a row.The agenda of the special meeting is not yet in the public domain, according to SBI Research.According to SBI Research, inflation will decline after December 2022.Unseasonal rains are expected to be unfounded. Farmers have become more cognizant of and more sensitive to local circumstances.According to the survey, crops of a longer duration are being planted to cover unseasonal rains.