Tuesday, July 8, 2025
  • Home
  • National
  • International
  • Movies
  • Technology
  • Business
  • Fitness
  • Lifestyle
  • Punjab
  • Contact us
No Result
View All Result
No Result
View All Result
Home Business

RBI MPC minutes show need for front-loading interest rate hikes in upcoming meetings, experts say

by author
May 19, 2022
in Business
0
RBI MPC minutes show need for front-loading interest rate hikes in upcoming meetings, experts say
0
SHARES
54
VIEWS
Share on FacebookShare on Twitter


With the Reserve Bank of India’s Monetary Policy Committee (MPC) members voting to tame inflation expectations by tilting towards hawkish policy, experts are bracing for front-loaded interest rate hikes in the upcoming meetings, at least until the August meeting. RBI released the minutes of its off-cycle MPC meeting on Wednesday and cited ‘several storms’ hitting together as the reason for the monetary policy response. Experts see a 25-50 basis points rate hike in the upcoming June meeting of the Monetary Policy Committee.

“The (RBI MPC) minutes have reinforced the necessity to frontload withdrawal of policy accommodation amid increasing risk of inflation expectations getting unanchored,” Kotak Economic Research said in a note. Kotak expects 40 to 50 basis points (bps) rate hike in the upcoming June meeting, adding that it sees cumulative repo rate hikes of 110-135 bps by end of FY 2023. RBI’s MPC is scheduled to meet next between June 6 to June 8, 2022. Following this, the next meeting will be held after two months ie in August.

Two members of the central bank’s MPC, Jayant Varma and Aashima Goyal, said the high inflation in the country will require front-loading of interest rate increases, according to the minutes. Jayant Varma, an external member of the MPC, said, “It appears to me that more than 100 basis points of rate increases need to be carried out very soon.”

“The minutes confirm our view that policy is behind the curve and has to significantly catchup via front-loaded rate hikes,” Nomura economists Sonal Varma and Aurodeep Nandi wrote in a note Wednesday. “In view of the MPC’s focus on frontloaded hikes to get to 5.15% soon, we are tweaking our policy path slightly to a 50 bps hike in June (vs 35 bps earlier),” it added.

High inflation expectations may lead to repo rate hike to pre-pandemic level of 5.15% by August

The minutes stated that elevated inflation has been led by supply-side global macro conditions, though a monetary policy action was necessary to avoid second round effects on domestic inflation expectations. Consumer Price Index (CPI) inflation rose to a 8-year high of 7.79 per cent and crossed RBI’s upper tolerance limit of 6 per cent for the fourth straight month in May. Barclays recently said going ahead  it sees inflation to remain above the RBI’s target band for three consecutive quarters (Q1-Q3 2022), marking the first official ‘failure’ of the monetary framework.

The RBI’s reaction function is now evolving with fluid macro realities and the central bank no longer thinks the output sacrifice required to tame supply-driven inflation can be so high on net, Madhavi Arora, Lead Economist, at Emkay said. Arora sees another 25 to 50 bps rate hike in June and a 100 to 125 bps hike in FY 2023. 

Further monetary policy tightening after August to depend on growth

Emkay’s Arora, however, also said that the front-loaded rate-hiking cycle does not imply a lengthy tightening cycle. Once the RBI reaches the supposed neutral pre-covid monetary conditions, the bar for further tightening may incrementally be higher amid increasing growth-inflation trade-offs, she added. RBI’s repo rate stood at 5.15 per cent in February 2020, ie pre-pandemic.

Aditi Nayar Chief Economist at ICRA Limited said ICRA expects pre-pandemic level of the repo rate by August. “After that we expect  a pause to see the impact of the rate hikes on economic growth. We foresee a terminal rate of 5.5% by mid 2023. Overtightening is not warranted in the current circumstances as inflation is being fuelled by global supply side factors, and may needlessly sacrifice domestic growth and sentiment,” Nayar added.





Source link

Related posts

EXCLUSIVE – Crypto giant Binance controlled ‘independent’ US affiliate’s bank accounts

EXCLUSIVE – Crypto giant Binance controlled ‘independent’ US affiliate’s bank accounts

June 5, 2023
Why investing just to save tax may be bad for you

Why investing just to save tax may be bad for you

June 5, 2023
Previous Post

Political uproar in Madhya Pradesh after Supreme Court directs OBC reservation in local body polls; check details | India News

Next Post

'Sheshnaag’ like structures, idol with 'Sinduri' mark were seen in Gyanvapi Masjid, says sacked surveyor Ajay Mishra’s report | India News

Related Posts

EXCLUSIVE – Crypto giant Binance controlled ‘independent’ US affiliate’s bank accounts
Business

EXCLUSIVE – Crypto giant Binance controlled ‘independent’ US affiliate’s bank accounts

June 5, 2023
Why investing just to save tax may be bad for you
Business

Why investing just to save tax may be bad for you

June 5, 2023
Share Market outlook today: Nifty, Bank Nifty may to gain on positive global cues; check support, resistance
Business

Share Market outlook today: Nifty, Bank Nifty may to gain on positive global cues; check support, resistance

June 5, 2023
Startup group of G20 calls for $1-trillion commitment
Business

Startup group of G20 calls for $1-trillion commitment

June 5, 2023
DHARAKSHA: Converting rice straw stubble to sustainable packaging material
Business

DHARAKSHA: Converting rice straw stubble to sustainable packaging material

June 4, 2023
Amrita Hospital, Kochi opens two new research centres; announces Rs 65 Crore for charitable care
Business

Amrita Hospital, Kochi opens two new research centres; announces Rs 65 Crore for charitable care

June 4, 2023
Next Post
‘Sheshnaag’ like structures, idol with ‘Sinduri’ mark were seen in Gyanvapi Masjid, says sacked surveyor Ajay Mishra’s report | India News

'Sheshnaag’ like structures, idol with 'Sinduri' mark were seen in Gyanvapi Masjid, says sacked surveyor Ajay Mishra’s report | India News

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

RECOMMENDED NEWS

Syria’s Interim Authorities Deploy Helicopters Against ‘Former Regime Remnants’ In Coastal Regions | World News

Syria’s Interim Authorities Deploy Helicopters Against ‘Former Regime Remnants’ In Coastal Regions | World News

6 months ago
Audio streaming gains popularity as homebound listeners seek variety

Audio streaming gains popularity as homebound listeners seek variety

4 years ago
Facebook to give users more control over their news feed, turn off algorithmic ranking

Facebook to give users more control over their news feed, turn off algorithmic ranking

4 years ago
For VC Hans Tung, the personal becomes public in a growing campaign to ‘stop Asian hate’ – TechCrunch

For VC Hans Tung, the personal becomes public in a growing campaign to ‘stop Asian hate’ – TechCrunch

4 years ago

BROWSE BY CATEGORIES

  • Animals
  • Architecture
  • Automobiles
  • Business
  • Culture
  • Fitness
  • International
  • Lifestyle
  • Movies
  • National
  • Sports
  • Technology
  • Travel

BROWSE BY TOPICS

Architecture culture Fitness indian architecture indian culture indian culture and heritage indian news lifestyle national news Technology technology news Travel travelling

About Us

Awaj Ludhiana Ki

Address

2667/3, Kishore Nagar, Tajpur & Jail Road, Ludhiana – 141008

Recent News

  • From Slave To Superpower – How The U.S. Rose From British Colony To Global Warlord
  • UK F-35B Jet Under Repair In Kerala, UK Grateful To India For Support
  • Why Argentina Collapsed 7 Times? PM Modi’s Visit Revives The Story Of A Fallen Nation That Was Richer Than Europe | World News
  • Indians In UAE Gave Up Citizenship, Paid Big For ‘Second Passport’ – Now The West Is Locking Them Out | World News
  • Aamir Khan to be honoured at IFFM 2025 with retrospective and Sitaare Zameen Par spotlight : Bollywood News

Category

  • Animals
  • Architecture
  • Automobiles
  • Business
  • Culture
  • Fitness
  • International
  • Lifestyle
  • Movies
  • National
  • Sports
  • Technology
  • Travel

Search

No Result
View All Result

Email

[email protected]

  • About
  • Advertise
  • Careers

Copyright © 2019 Awaj Ludhiana Ki or it's affiliates | Website by Awaj Ludhiana Ki Team

No Result
View All Result
  • Home
  • Contact us
  • Animals
  • Architecture
  • Automobiles
  • Business
  • Culture
  • Fashion
  • Fitness
  • Food
  • International
  • Lifestyle
  • Movies
  • National
  • Sports
  • Technology
  • Travel
  • Punjab

Copyright © 2019 Awaj Ludhiana Ki or it's affiliates | Website by Awaj Ludhiana Ki Team

Login to your account below

Forgotten Password?

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In