RBI likely to announce another repo rate hike tomorrow to manage inflation

Mumbai: The Reserve Bank of India is likely to announce the hike in benchmark interest rate -- repo rate -- on Thursday after a three-day meeting of its Monetary Policy Committee.
Governor Shaktikanta Das will announce the outcome of the meetings at 10 in the morning tomorrow, followed by a press conference at noon. RBI started its first bi-monthly review of the new financial year with its Monetary Policy Committee meeting on April 3, April 5 and April 6. The central bank has six bi-monthly reviews of its monetary policy in a year. And, there are out-of-cycle reviews in which the central bank conducts additional meetings in times of emergency.
At the latest Monetary Policy Committee (MPC) of the RBI in early February, it decided to raise the repo rate by 25 basis points to 6.5 per cent to manage inflation. So far, RBI raised the repo rate, the rate at which it lends to banks, by 250 basis points cumulatively since May 2022.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
These meetings are being watched carefully by stakeholders as almost every central bank tries to take stock of the rising inflation, with a fear of a looming mild recession.
According to SBI Research's latest Ecowrap report, the RBI is expected to pause its interest rate hike and the current 6.5 per cent repo rate could be the terminal rate for now.
The report asserted that the RBI has enough reasons to pause the repo rate hike in the April meeting.
At the latest Monetary Policy Committee (MPC) of the RBI in early February, it decided to raise the repo rate by 25 basis points to 6.5 per cent to manage inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
According to advisory firm Emkay Global Financial Services, RBI is likely to hike the repo rate by 25 basis points (100 basis points is equivalent to 1 percentage point).
"In addition (to the rate hike), the neutral stance will give the MPC flexibility to be non-committal on forward guidance, yet subtly give direction on a 'pause'," Emkay said in a report. (ANI)