Amitabh Chaudhry, managing director, and chief executive officer of Axis Bank on Wednesday said the stance of the Reserve Bank of India (RBI) was more hawkish than expected.
Earlier today, the RBI Monetary Policy Committee raised the benchmark lending rate on December 7 by 35 basis points to 6.25 percent in a bid to tame inflation, which has remained above its tolerance level for the past 11 months.
This is the fifth consecutive rate hike after a 40 basis points increase in May and 50 basis points hike each in June, August and September. In all, the RBI has raised the benchmark rate by 2.25 percent since May this year.
In an interview with CNBC-TV18, Chaudhry said, "While we have gone through 225 basis points hike in the last 6 months or so and while the inflation is coming down, RBI has also very clearly tempered the growth expectations on the GDP side. So it is a balancing act, they have done a great job till now and one hopes that they will continue to do that."
He said that there could be another hike of 25 basis points before things stabilise, "RBI is very clear that they need to get inflation under control and they will continue to do things to ensure that it is brought in the 4-4.5 percent range. So that hints at another hike and hints that the accommodative stance will continue to be withdrawn."
RBI governor Shaktikanta Das retained the inflation projection at 6.7 percent for the current fiscal. The RBI also slashed its GDP growth forecast to 6.8 percent from an earlier estimate of 7 percent for the current fiscal.