The RBI governor will announce the bi-monthly monetary policy on December 7. It will be the last MPC announcement in 2022. The hike has been increased by 190 basis points from 4.4 per cent in May to 5.9 per cent in September.
After an initial rate hike of 40 basis points on May 4, the hike has gone up by 50 basis points thrice, on June 8, August 5 and September 30.
The hike was to reduce demand in the economy and bring inflation down. Retail inflation in India has decreased from 7.79 per cent in April to 6.77 per cent in October due to rate hikes.
It may slow down economic activity in the economy. The rate hikes have to be balanced.
According to Business Standard, the repo rate will be hiked by 35 basis points in the upcoming MPC announcement.
Given that the past rate hikes are having an impact on the slowing of economic activity, it would be prudent to raise rate hikes by a lesser magnitude than in the past. Vivek Iyer, partner in Grant Thornton Bharat, said we expect a 35 basis point rate hike in the MPC announcement tomorrow.
Manish P Hingar, founder of Fintoo, said that there is an expectation that the MPC will go for a moderate interest rate hike to the tune of 25 -- 35 basis points despite signs of easing inflation and economic growth tapering.
He said that we believe that 6.25 per cent could be the terminal rate for now.
Jyoti Prakash Gadia, managing director at Resurgent India, said that the rate hike is likely to be lower than the previous rate hike of 50 basis points.
The RBI is expected to continue its efforts to control inflation and the repo rate will be hiked by 30 to 35 basis points in the coming review, according to Gadia, the Indian economy is showing mixed signals emerging from the current scenario.
The RBI governor will announce the rate hike at 10 AM on December 7.