The MPC’s announcement to raise the key policy rate by 50 bps met the majority market expectations head-on. The trifecta of negativities, plaguing the global landscape, is also reflected in our estimates of the measure of domestic monetary policy independence, now at March 2020 levels when the pandemic had just set in. This sums up the rate decision of the Reserve Bank of India (RBI) and it may have to again recalibrate the monetary decisions of US Fed even in December policy.
We thus believe that a 35-bps rate hike in December looks imminent, taking the repo rate to 6.25%
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
