Interest rates: RBI will increase the repo rate further, the interest rates of banks will increase even more

New Delhi : India Ratings Principal Economist Sunil Kumar Sinha said the RBI may continue with the hike in the repo rate till it achieves a ‘neutral policy rate’. Interest rates:

Economists and analysts expect that the Monetary Policy Committee (MPC) of the Reserve Bank will continue to hike rates till the policy rate is 6-6.5 percent by the end of the current financial year. does not reach the ‘neutral rate’.

According to the news of PTI, the Reserve Bank of India (RBI) on Friday increased the policy rate repo rate by 0.5 percent to 5.4 percent to control retail inflation. This is the third consecutive time for a hike in the policy rate. So far in the financial year 2022-23, the repo rate has been increased by 1.4 percent. With this, the key policy rate has exceeded the pre-pandemic rate. The repo rate hike in February 2020 stood at 5.15 per cent.

Know when the rates will increase

According to the news, Sunil Kumar Sinha, Principal Economist at India Ratings said that the RBI may continue the process of increasing the repo rate till the ‘neutral policy rate’ is achieved. Sinha said that its short-term policy rate (Interest). With the rates hike on loans), it is expected that the economy will be stable in the long run. He said that we believe that in the current environment, this neutral policy rate can be in the range of 6-6.5 per cent.

Rate hike will depend on data

Swiss brokerage firm UBS Securities has estimated that the MPC may take the repo rate further to 5.75 per cent by the end of the financial year. It said uncertainties remain high in the growth and inflation outlook and going forward, rate hikes will depend on the data.

UBS Securities India Chief Economist Tanvi Gupta Jain, while anticipating further increase in rates, attributed the growing current account deficit to the reason for the current account deficit to be between 3.5-4 percent of GDP in the first half of the financial year. could.

Likely to increase this much by December

Rahul Bajoria, Chief Economist at Barclays India, said that the repo rate hike can be further increased by 0.50 percent by December.

On the other hand, Radhika Rao, Senior Economist at DBS, Singapore, said that inflation may remain above the target set by the beginning of the financial year 2023-24. Therefore, a further increase of 0.75 per cent can be seen by March.