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“We expect the repo rate to increase by 35 bps to 5.25 per cent after an overall 90 bps hike in this cycle. This will take the rate back by the end of 2019. There is a clear shift in the tightening stance. Absent, the guidance is likely to emphasize the priority of housing withdrawals in line with inflation expectations,” said Radhika Rao, executive director and senior economist at DBS Group Research.
The RBI has hiked interest rates twice so far this cycle – first by 40 bps at the “off-cycle” monetary policy meeting in May, followed by 50 bps in June. With inflation rising and the rupee trading near record lows, India’s central bank is expected to raise interest rates to match its global peers.
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