RBI could hike repo rate by another 1% in FY23: Report
Zee News
Crisil said price rise is getting broad-based, and the Reserve Bank is likely to respond with rate hikes of up to 1 percentage point in FY23.
New Delhi: With headline inflation accelerating to an eight-year high of 7.79 per cent in April, ratings agency Crisil said price rise is getting broad-based, and the Reserve Bank is likely to respond with rate hikes of up to 1 percentage point in FY23.
The research wing of the entity said it now expects the average consumer price inflation for FY23 to come at 6.3 per cent -- above the RBI's tolerance of 6 per cent -- as against 5.5 per cent recorded in FY22.
The RBI hiked its key rate by 0.40 per cent in a surprise move last week while keeping an accommodative stance. Analysts said the move had to be undertaken fearing a sharp spike in the April data.
"Inflation is set to become broad-based this fiscal, rising across food, fuel and core inflation....We expect the RBI to raise repo rates by another 0.75 per cent to 1 per cent in the rest of this fiscal," Crisil said.
Its analysts made it clear that the rate hikes will be ineffective in bringing down food or fuel inflation, but can help check a generalisation in inflation by curbing the second-round effects.
