The Reserve Bank of India (RBI) will continue its calibrated stance of withdrawing easy monetary policy and is expected raise key rates 25 basis points each at first quarter policy review on July 27, economists, treasurers, and said fund managers in a poll.
The poll of 32 respondents estimated the central bank to raise the reverse repo tender rate, paid by RBI on borrowings from banks, by 25 basis points to 4.25%, and the repo tender rate, paid by banks on loans from RBI, to 5.75%.
?Inflation is expected to touch 12% for July,? said Jahangir Aziz, chief economist at JP Morgan India. ?We are expecting a 25 basis point hike, both in reverse repo and repo.?
On July 2, RBI had hiked both reverse repo and repo tender rates by a quarter percentage point each to 4% and 5.5%, respectively, in an effort to contain inflation and anchor inflationary expectations. This was the third set of hikes this year, starting March.
Since February, wholesale price index inflation has remained in double digits, rising to a high of 11.2% in April. In June, the headline number was 10.55%. Stubborn food article prices, pressure from non-food articles, as well as rising fuel prices are likely to keep inflation firm in the near term, analysts said.