- Most economists believe that a 25-basis-point rate hike in April is almost certain.
- This is after the February CPI inflation print came in at 6.44% – a number that is slightly lower than January’s print of 6.52%, but still above the Reserve Bank of India’s upper tolerance limit of 6%.
- The US Fed, which has so far led rate hike action, is expected to take a pause in March due to the collapse of Silicon Valley Bank and Signature Bank.
Shaktikanta Das-led Monetary Policy Committee (MPC) is expected to hike the repo rate by 25 basis points (bps) come April, as retail inflation continues to remain hot and above the central bank’s upper tolerance limit of 6%.
This is despite the fact that the recent collapse of Silicon Valley Bank and Signature Bank in the US has resulted in analysts saying the US Federal Reserve is likely to pause its rate hike spree to let the country’s banking system take a breather.
While the US Fed has led other central banks in raising interest rates so far, the Reserve Bank of India (RBI) could stick to its guns regardless of what the Fed does on March 22, when it meets to decide the direction of its monetary policy, analysts say.
“The RBI will remain hawkish in the April policy as inflation prints have spiked
back over 6% in January-February along with core inflation remaining sticky