RBI to announce another rate hike on August 5

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RBI to announce another rate hike on August 5

On August 5, the RBI is expected to announce another rate hike as it plays catch up with other central banks to contain inflation and protect against further rupee depreciation. The deposit rate was raised by 75 basis points bps at its July meeting, but the ECB instituted its first rate hike in 11 years as it increased the deposit rate by 50 basis points bps.

On August 4, the rates are expected to be raised by 50 bps to 1.75 per cent. A Business Standard poll of 10 economists predicts that the rates will be raised by 35 -- 50 bps.

The repo rate is expected to be equal to or above the pre-pandemic level. Even if the rates were raised by 50 bps, the quantum of hikes would still be lower than in other major economies. Since March 2020, the US Fed has increased rates by 1.65 per cent, while the rate increase has gone up by 2.25 per cent. India's rates would have gone up by 1.4 per cent with a 50bp hike.