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India's economic growth to slow if RBI hikes interest rates: Finance Secy

T V Somanathan was reacting to reports of RBI likely raising its inflation projection for the current fiscal year at its June monetary policy meeting

Topics
India's economic growth | Interest rate hike | RBI

Reuters  |  New Delhi 


photo: Bloomberg
Photo: Bloomberg

India's economic growth rate is likely to slow if the central bank hikes interest rates, Secretary T V Somanathan told CNBC TV18 on Thursday.

Reserve Bank of India is likely to raise its inflation projection for the current fiscal year at its June monetary policy meeting and will consider more interest rate hikes, a source said on Wednesday.

The central bank hiked its repo rate by 40 basis points (bps) to 4.40% following a emergency meeting earlier this month.

In April, raised its inflation forecast for the current fiscal year to 5.7%, 120 bps above its forecast in February, while cutting its economic growth forecast to 7.2% for 2022/23 from 7.8%.

The next meeting of the MPC is scheduled for June 6-8.

The cut the repo rate by a total of 115 bps in 2020 to cushion the impact of the COVID-19 pandemic and anti-virus measures. It is now looking to reverse those cuts at a faster pace than it wanted to earlier, the source said.

Before the crisis in Ukraine erupted, the expected retail headline inflation to peak by March and then ease back towards 4% in the second quarter of 2022/23 that started on April 1.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, May 12 2022. 15:22 IST

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