Quote on RBI Monetary Policy By Mr Sujan Hajra, Anand Rathi Shares & Stock Brokers
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Below is quote on RBI Monetary Policy by Sujan Hajra - Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers
The 50 bps rate hike by the Reserve Bank of India today is higher than our expectations of 40 bps rate hike. The measures today are consistent with sharply upwardly revised inflation and unchanged growth projections for the current financial year by the Reserve Bank. Also, continued high inflation, aggressive rate hike plans of the US Federal Reserve, strengthening of U.S. dollar and portfolio capital outflow from emerging market economies including India are factors which influenced the decision of the Reserve Bank of India. The central clearly is front loading the monetary policy tightening to normalise the rate to the pre-pandemic level quickly. Thereafter, the Reserve Bank is likely to scale down the extent of rate hikes to instalments of 25 bps each.
At the peak, we expect the Reserve Bank of India to take the repo rate to the 6-6.5% range during the ongoing rate hike cycle. While the major part of rate hike by the Reserve Bank of India are already factored in by most parts of the financial market, in the near term, the higher than expected rate hike can have some negative influence in the equity and bond market.?
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