RBI MAY INCREASE 25–50 BASIS POINTS AT THE MONETARY POLICY MEETING NEXT WEEK
Several investment managers and experts predict that the Reserve Bank of India's (RBI) rate-setting committee would increase the repo rate by 25 to 50 basis points
during the monetary policy meeting scheduled for August 3–5.
The opinions of economists and fund managers on the policy approach are mixed.
Few people believe that the position will shift to "Neutral," while some believe that the withdrawal of the accommodating stance may continue.
"In the August policy review, we anticipate a 40–50 bps increase in the repo rate. The retreat from a conciliatory posture could continue "said Vivek Kumar, a QuantEco Research economist.
In its most recent two policies, the central bank increased the rate by a total of 90 basis points in May and June because of rising inflation that had been consistently above the RBI's upper tolerance zone.
"Repo rate rise of 25–35 basis points. The stance can change to neutral.
Given that commodity prices have corrected and crude oil prices are range bound, guidance may be a little more reassuring than past policy "said Mahendra Jajoo, Mirae Asset Investment Managers' CIO for Fixed Income.