The RBI may "pause" the repo rate hike in February policy, though it could still guide the markets with a rate action in future that will be purely data dependent, says SBI Research
Economic Survey says India's strong macro fundamentals will underpin the return of global capital flows to the country once the "fog of uncertainty" lifts.
Financial markets in 2022 have remained volatile and edgy, with the central banks globally in unison in a rate hike cycle.
RBI governor Shaktikanta Das says there are signs of inflation slowing down but it is only expected to decline in H1 FY24.
Retail inflation falls within the RBI’s tolerance threshold of 4% (+/-2%) for the first time in 2022.
As credit offtake improves due to growing corporate interest and optimism around GDP growth, the banking sector is set to reap the riches.
The stock markets slipped in red after the RBI announced rate hike, led by interest rate sensitive realty stocks.
The RBI may likely hike rates in smaller magnitude in December policy, attuned to emerging market central banks and the overall rate-setting tone, the SBI Research report says.
The RBI is widely expected to opt for a lower rate hike of 35-50 bps in interest rates, along with a change in policy stance to “neutral”.
Monetary policy can only hope to address future inflation, not today's inflation, says RBI deputy governor Michael Patra.
