SBI Research Calls for 50 bps Repo Rate Hike in Coming RBI Reviews

SBI Research has recommended that the Reserve Bank of India (RBI) consider raising the repo rate by 25 basis points each in the October and December monetary policy reviews. According to the report, a cumulative 50-basis-point hike could help the country deal with emerging global challenges and contain inflationary pressures. The recommendation assumes significance ahead of the RBI’s next bi-monthly monetary policy review. The report also pointed to the renewed rise in global crude oil prices amid tensions in West Asia as a key risk for the domestic economy.

India meets a large share of its crude oil requirements through imports, making domestic inflation vulnerable to fluctuations in global oil prices. SBI Research said higher crude prices could intensify inflationary pressures and therefore called for a calibrated tightening of monetary policy. The RBI’s August review had kept key policy rates unchanged, while the next monetary policy review is scheduled for October 5–7, according to the information provided in the report.