SBI economists halve December RBI rate hike forecast to 25 bps on easing rupee pressure, foreign inflows
State Bank of India has revised its estimate for the upcoming Reserve Bank of India rate hike. The new projection suggests a 0.25 percent increase instead of a previously expected 0.50 percent. This adjustment follows improvements in external conditions and a revival in foreign fund inflows. Analysts note that inflation is projected to remain above 6 percent in November before easing.
Mumbai: The State Bank of India's Economic Research Department has reduced its forecast for the Reserve Bank of India's December rate hike to 0.25 percent, from an earlier 0.50 percent. This revision is due to improved external conditions, a resurgence in foreign fund inflows, and reducing pressure on the rupee. The report was released hours after retail inflation surpassed the RBI's 6 percent tolerance band.
SBI economists believe there is a 50:50 chance that the December hike will be the final one in the current cycle, with the terminal repo rate potentially reaching 5.75 percent. The RBI raised the policy rate by 0.25 percentage points to 5.50 percent in October, anticipating further hikes amid inflation, a weak rupee, and high crude oil prices. SBI expects inflation to stay above 6 percent in November before easing.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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