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This article is more than 2 month old.

Citi expects 15 bps reverse repo hike in October 8 RBI monetary policy

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Citi on Thursday said that it is expecting 15 basis points (bps) reverse repo hike in the October 8 Reserve Bank of India's monetary policy. Accordingly, the reverse repo will be upped to 3.5 percent from the current 3.35 percent, Citi said.

Citi expects 15 bps reverse repo hike in October 8 RBI monetary policy
Citi on Thursday said that it is expecting 15 basis points (bps) reverse repo hike in the Reserve Bank of India's monetary policy to be held on October 8. Accordingly, the reverse repo will be upped to 3.5 percent from the current 3.35 percent, Citi said.
Advancing its reverse repo forecast hike to October from December, Citi said that increasing size and cut-off rates of recent variable rate repo (VRRR) auctions might have indicated RBI's willing to normalize the liquidity management “operations” earlier than expected.
"Hence, we shift our 15 bps reverse repo hike forecast to the October policy from December earlier. That said, MPC would try to differentiate between these “operational changes” and monetary policy's continued growth bias for an extended period of time," it added.
RBI raised the cut-off in the latest 7-day VRRR to 3.89 percent.
The central bank had on August 6 kept interest rates unchanged at a record low as it chose to support economic revival over inflation. The six-member Monetary Policy Committee (MPC) voted in favour of retaining the main repurchase rate at 4 percent but was split on continuing with the lower-for-longer stance.
The RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low. This was the seventh straight meeting when it maintained the status quo.
Meanwhile, the apex bank's former deputy governor R Gandhi recently claimed that the Reserve Bank of India (RBI) is expected to continue with its current accommodative stance to maintain sufficient liquidity in the system and monetary policy tightening is several quarters away as the economic revival has not reached the pre-Covid level,  He said the low-interest rate regime will continue to support the economic activities.
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