Economists see up to 50 bps rate hike by RBI

Bengaluru, September 23

The RBI is set to raise interest rates again next week with a slim majority of economists in a poll expecting a half-point hike and some others expecting a smaller 35 basis point rise.

There was a wide consensus that the RBI will raise rates at the September 30 meeting, although there were differences over how far it would go with inflation accelerating to 7% and with the rupee weakening.

Bankers’ forecast

• The RBI has lagged many of its global peers, despite inflation sticking above the top end of its target range of 2-6% all year
• It has raised rates in three separate moves since May, one of them unscheduled, totalling 140 basis points and taking the key repo rate to 5.40%

The RBI has lagged many of its global peers, despite inflation sticking above the top end of its target range of 2-6% all year. It has raised rates in three separate moves since May, one of them unscheduled, totalling 140 basis points and taking the key repo rate to 5.40%. In the latest poll, economists were split five ways on what the RBI will do at its next meeting.

Slightly over half, 26 of 51, said the RBI would go for a 50 basis point hike, taking the repo rate to 5.90%. Another 20 predicted a 35 basis points increase. The remaining five respondents pencilled in more modest increases, ranging from 20 to 30 basis points. — Reuters