Key Points
MUMBAI : Although the Reserve Bank of India (RBI) signalled it wont hesitate to hike rates again despite hitting the pause button in April, several economists now expect the central bank will keep its repo rate on hold for an extended period..
The central banks monetary policy committee (MPC) opted to hold the repo rate at 6.5% following six consecutive hikes since May last year, citing the need to evaluate the effects of the past increases..
We expect headline CPI inflation to come in below 6% (the upper end of the target band) for the rest of the year, and now expect the RBI to remain on hold till end-2023 (as against our earlier forecast of a 25-bps rate cut in the December policy meeting) while maintaining tight banking system liquidity," Goldman Sachs said in a report..
We think the bar set for further rate hikes is quite high, and based on our own growth and inflation forecasts, we do not expect any more rate hikes from the RBI in this cycle," said Kaushik Das, chief economist, India and South Asia, Deutsche Bank..
Das wrote that if El Nino or other weather disruptions lead to a sharp spike in food and overall headline CPI inflation in the coming months, then Deutsche Bank would assess the need for incremental rate hikes..
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