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In the next policy meeting, the RBI may raise the repo rate by 35 basis points

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In Science and Space: Experts believe that the RBI could opt for a third consecutive rate hike of 25 to 35 basis points to keep inflation under control. The RBI is expected to release its bimonthly monetary policy results later this week. The six members of the MPC will meet from August 3 to discuss monetary policy and the results will be announced on Friday (August 5). Due to multi-year high inflation, the RBI is expected to raise repo rates further. The RBI has raised interest rates by 90 basis points over the past two policies, with inflation remaining above the safe limit of 6%.

He added that an aggressive rate hike by the Fed is fueling expectations that the RBI can also halt its rate hike. However, the BoB report believes that the latest conditions in India do not warrant the central bank’s positive stance. In its research note, the BoB said that in the absence of new shocks, the inflation path in India would evolve in line with the RBI’s forecast. As a result, the BoB expects the RBI to raise rates by just 25 basis points in its August policy, followed by another 25 basis point hike in the next two meetings.

BofA Global Research in its report said: “We now expect the RBI MPC to raise the policy repo rate by 35 basis points on August 5 and change its stance to tighten the correction, according to BofA Global Research. He added that the possibility of a massive 50 basis point increase and a measured 25 basis point increase also cannot be ruled out. Meanwhile, another Baroda Bank research report said that while the Federal Reserve raised interest rates by 225 basis points in the current year, the RBI raised the repo rate by 90 basis points.

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Most experts expect a rate hike of about 20 basis points to 35 basis points, but a 50 basis point increase is also not ruled out. The country’s CPI is inflation-adjusted slightly to 7.01 percent in June from 7.04 percent in May 2022. However, inflation remained high and above the RBI’s upper limit of 6% for the sixth month in a row. Notably, CPI inflation peaked at 7.79% in April. The RBI raised its prime rate to 40% in May, followed by another 50 basis point hike in June. The repo policy rate currently stands at 4.90%.

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