RBI rate hike of 25 bps in line with D&B expectations

By Dr. Arun Singh, Senior Economist, Dun & Bradstreet India

In line with D&B expectation, RBI resorted to a 25 basis point hike in the repo rate in its mid-quarter policy review. Persistence of inflation way above the comfort levels and the still incomplete pass through of global fuel prices in the domestic market has been increasing the concerns of sustaining growth in the medium to long term. Moreover, the upward trend in the non-food manufactured products inflation still reflects the prevailing demand side pressures. The RBI is thus, expected to undertake another round of policy rate hike before taking a pause. As a result, going ahead, we anticipate the economic activity, both the investment as well as the demand, to remain subdued.