In the RBI’s monthly bulletin released late Friday, the central bank said it will have to front-load its monetary policy to fight high inflation and shield medium-term growth. Inflation has remained above the RBI’s tolerance level of 6% since January.
The Reserve Bank of India could raise interest rates by 50 basis points at its upcoming policy review, thanks to stubbornly high inflation and the pace at which major global central banks are hiking rates, Morgan Stanley said.
“We were earlier expecting a 35 bps increase, however, sticky inflation and continued hawkish stance of DM (developed market) central banks warrant continued front-loading of rate hikes in our view,” Upasana Chachra, chief India economist at Morgan Stanley, said in a note on Friday.
In the RBI’s monthly bulletin released late Friday, the central bank said it will have to front-load its monetary policy to fight high inflation and shield medium-term growth. Inflation has remained above the RBI’s tolerance level of 6% since January.
Risks to the inflation outlook are skewed upwards due to the uncertainty around changes in global commodity prices and the possibility of imported inflation if the exchange rate weakens, Chachra pointed out.
