InvestorQ : How much higher do you see the RBI taking repo rates from here on?
Lavanya Subramanian made post

How much higher do you see the RBI taking repo rates from here on?

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Anamika Sodhani answered.
9 months ago
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Both the Fed and the RBI have hinted at a series of rate hikes. However, that would be easier said than done. Neither central bank would risk a recession, so they will be a lot more data driven. Larry Summers and others have already warned that rate hikes may end up curbing growth and causing a recession instead of controlling inflation. Already, the US is expected to see negative GDP growth in Q1, while India’s Q4 GDP is expected to be lower than 3%. If you add the China slowdown story, too much hawkishness may be tough.

What is the likely scenario. To begin with, the RBI is likely to stick to 50 bps rate hike and 50 bps CRR hike in the June 2022 policy. However, one can expect a pause or at least a calibrated approach after that. For example, RBI would not insist on monetary tightness if it was to result in hampering growth momentum. Post June, if there are signals that inflation is tapering, central banks may change paths and choose to again focus on growth.

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