Mumbai: Leading lenders Standard Chartered and HDFC Bank on Friday said they expect the Reserve Bank to hike its short-term lending rate by 25 basis points in the forthcoming monetary policy, a view echoed in an RBS survey of money market participants.
"We see a 25 bps increase in the repo rate at the 26 July policy as inevitable, inflation management will remain the priority, but policy statement is likely to be less hawkish," StanChart said in a note.
Similarly, a majority 71 per cent of the 151 respondents in a Royal Bank of Scotland (RBS) survey opined that they expect the monetary authority to go in for yet another spike in its key rates by 25 bps, while 5 per cent said it could be 50 bps, and 24 per cent see the RBI leaving the rates unchanged.
"The RBI rate action will continue to be driven somewhat mechanically by the inflation data that remain way above its comfort zone. Thus a 25 bps hike in the policy rate seems almost certain," HDFC Bank chief economist Abheek Barua in his report said.
The RBI has hiked its key rates 10 times or 275 bps since March 2010 to tame the uncomfortable inflation number, which stood at 9.44 per cent for June, and has clearly articulated that it is ready to sacrifice growth in the short term.
However, recent signs like the food inflation cooling down and industrial production data being consistently low has led to a view that RBI may pause the tightening for now.
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