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RBI maintains interest rates at December meeting and raises interest rates early next year: Reuters poll

The Reserve Bank of India will raise its reverse repo rate early next year and the next quarter, according to a Reuters economist poll.

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This happens when the central bank’s recommended gauge, retail inflation, has been within the 2% to 6% target range since July.

A December 1-3 poll of 50 economists showed that at the December 8 meeting, the RBI would maintain a benchmark interest rate of 4.00% and a reverse repo rate of 3.35%.

The central bank of India was expected to raise its repo rate by 25 basis points in the second and fourth quarters of next year and raise its borrowing rate to 4.50% by the end of 2022.

The rate at which RBI borrows from banks (reverse repo rate) is expected to rise to 4.10% by the end of next year, with the first increase of 25bps in the first quarter of 2022 and a cumulative 50bps in the following three quarters.

“Previously, we expected the RBI to raise the reverse repo rate by 15-20 bps in December, but given the uncertainties that arise from the new COVID-19 variant, we anticipate the status quo,” said Morgan Stanley. The economist writes.

‚ÄúCentral banks may wait to understand the risks posed by the new variant. If the impact of the new COVID-19 variant on growth is curtailed, policy normalization will begin in February and reverse. The repo rate is expected to rise. “.”

Economists were nearly split when asked what the risk was that the spread of the latest COVID-19 variant would delay RBI interest rate volatility. Twelve of the 23 respondents said they were at low risk, while the other 11 said they were at high risk.

“We can’t expect very strict blockades that could have a significant impact on growth,” said Sakshi Gupta, senior economist at HDFC Bank.

“But if this variant spreads around the world and impacts the supply chain, input cost pressures will be even higher. This is another concern for inflation and requires RBI to address interest rates.”



RBI maintains interest rates at December meeting and raises interest rates early next year: Reuters poll

Source link RBI maintains interest rates at December meeting and raises interest rates early next year: Reuters poll

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