The Reserve Bank of India (RBI) may raise the repo rate by another 0.40% during its monetary review to be held next week. The foreign brokerage firm Bank of America Securities announced it on Friday. Also at the end of May, the RBI had raised the repo rate by 0.40% to 4.40%. In order to control rising inflation, the RBI had raised the policy rate.
The brokerage firm said in a report on Friday that the inflation figure was also estimated at 7% in May. Therefore, the Reserve Bank should take many other measures to control it.
According to the report, the RBI may increase the repo rate by another 0.40% next week. Apart from this, in the August review as well, it may increase by 0.35%. If that doesn’t happen, the RBI may make up its mind to rise 0.50% next week and 0.25% in August.
RBI Governor Shaktikanta Das recently said that given the pressure to bring inflation down to a healthy 6%, another hike in the policy rate is not a big deal.
Market experts say this rate hike will be ineffective in reducing food or fuel inflation. But it can help to prevent a further increase in general inflation. The surge in inflation is alarming and a scary start to the new financial year. For this reason, it is estimated that rates could also increase by 1% this fiscal year. If RBI raises rates next week, the EMI for home loans could increase from next month.