The Reserve Bank of India (RBI) is reportedly expected to hike the repo rate once again. According to a Reuters poll of economists, after the Union Budget 2023-24, the RBI may hike the repo rate by 25 basis points (bps).
The Reuters poll results also suggest that the RBI may hike repo rate to 6.50 per cent at the Monetary Policy Committee (MPC) meeting scheduled to be held one week after the Budget 2023. As per last updates, this meeting is reportedly scheduled to be held from February 6 to 8, 2023.
The report adds that following this round of expected rate hike by RBI, the central bank may then “pause, waiting for inflation to fall before considering a shift toward a stimulative stance as Asia’s third-largest economy slows.”
It reads, “Those forecasts were unchanged from a poll last month, with predictions for a slowdown in GDP growth to 6.0% in the 2023/24 fiscal year from an expected 6.7% in the current one also barely changed.”
Elaborating on the details of its poll, the Reuters report mentions, “More than three-quarters of economists, 40 of 52, expected the RBI to raise its key repo rate (INREPO=ECI) by 25 basis points to 6.50%, according to a Jan. 13-27 Reuters poll. The remaining 12 predict no change at the Feb. 8 meeting. The median forecast was for rates to remain at 6.50% until the end of 2023.”
Apart from this poll, many experts suggest that in this Union Budget 2023-24, the government’s focus may also be on lowering the fiscal deficit.