You are here: Home » Markets » News
Business Standard

Will Omicron scare force RBI to maintain the status quo on rates?

Covid-19 variant Omicron is making the global markets uncertain. So, what will the RBI do on Wednesday? Will it keep its gun powder dry, or will it pull the trigger by hiking rates? Let's find out

Global Markets | RBI | BSE Sensex

Nikita Vashisht & Puneet Wadhwa  |  New Delhi 

As global central banks fear being ‘behind the curve’ amid sticky inflation, India’s Reserve Bank of India is huddled up on Mint Street to discuss its bi-monthly policy. The apex bank’s monetary policy outcome, which will be announced tomorrow, assumes importance as the US Federal Reserve no longer see inflation being ‘transitory’. That apart, economic uncertainties are also rising amid a new variant of coronavirus. In a Business Standard poll of 16 economists and bond market experts, the consensus emerged of a status quo policy on the repo rate at four per cent, and the stance being “accommodative”. While six expected a sure hike in the reverse repo rate, 10 said the rise of the Omicron variant might not allow the to do that. One among the 10 said a reverse repo hike could be done outside the formal policy, because it is at the sole discretion of the and not the remit of the six-member monetary policy committee. The significance of governor Shaktikanta Das’s statement tomorrow will be the central bank’s outlook on economic recovery. The RBI has, so far, refused to hike rates, stating that any hasty withdrawal would jeopardise the nascent recovery. If the Omicron variant does not cause widespread disruption, economists expect the full-year growth expectation of the RBI, at 9.5 per cent, to be met. According to Sonal Varma, who is chief economist for India and Asia ex-Japan at Nomura, even though the Omicron variant does add to uncertainty, the baseline view still points to inflation rising towards the upper-end of the RBI’s 2-6% target. Given this, the brokerage expects a 40-basis point reverse repo rate hike, and a cumulative 75 bps of repo and reverse repo rate hikes in 2022. For Rahul Bajoria, chief India economist at Barclays, the recovery in activity levels, along with signs of an elevated inflation path, will push the RBI closer towards policy normalisation. However, he says, the pace and quantum of the normalisation of the policy corridor remains uncertain. Therefore, in his base case scenario, the RBI may go for 20bp hikes in the reverse repo rate in both the December and February MPC meetings. In sum, the economy is recovering but it may be difficult for the RBI to consider high inflation as “transitory”.

Besides, nobody knows how serious the threat of Omicron is. Therefore, even if the RBI maintains a status quo on the policy, keeping a hawk-eye on the evolving pandemic picture, a rate hike in February is certain if there is no third wave, driven by Omicron. As regards today, equity may be volatile as investors remain cautious ahead of the policy outcome. Further, developments around the new coronavirus variant and policy response of various governments will also guide the market trajectory. Stock-specific flow, global cues and commodity prices will sway the sentiment. In the primary market, RateGain Travel Technologies Ltd is opening its three-day initial public offer today. The company has fixed a price band of Rs 405-425 per share and hopes to garner close to Rs 1,336 crore at the upper price band of the offer. The fell 949 points yesterday to end the day at 56,747. The Nifty50, on the other hand, ended 284 points lower at 16,912.

Watch video


Business Standard Digital

Business Standard Digital Monthly Subscription
Complete access to the premium product
Convenient - Pay as you go
Pay using Amex/Master/VISA Credit Cards and VISA Debit Cards Only
Auto renewed (subject to your card issuer's permission)
Cancel any time in the future
Requires personal information

What you get?


  • Unlimited access to all the content on any device through browser or app.
  • Exclusive content, features, opinions and comment – hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.
  • 18 years of archival data.


  • The product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the email with the cancellation request to Include your contact number for speedy action. Requests mailed to any other ID will not be acknowledged or actioned upon.


Business Standard Digital
Subscribe Now and get 12 months Free

Business Standard Premium Digital - 12 Months + 12 Months Free
Subscribe for 12 months and get 12 months free.
Single Seamless Sign-up to Business Standard Digital
Convenient - Once a year payment
Pay using an instrument of your choice -all Credit and Debit Cards, Net Banking, Payment Wallets, and UPI
Exclusive Invite to select Business Standard events

What you get


  • Unlimited access to all content on any device through browser or app.
  • Exclusive content, features, opinions and comment - hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.


  • The monthly duration product is an auto renewal based product. Once subscribed, subject to your card issuer's permission we will charge your card/ payment instrument each month automatically and renew your subscription.
  • In the Annual duration product we offer both an auto renewal based product and a non auto renewal based product.
  • We do not Refund.
  • No Questions asked Cancellation Policy.
  • You can cancel future renewals anytime including immediately upon subscribing but 48 hours before your next renewal date.
  • Subject to the above, self cancel by visiting the "Manage My Account“ section after signing in OR Send an email request to from your registered email address and by quoting your mobile number.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, December 07 2021. 08:00 IST