New Delhi: Economists on Thursday maintained their call for a back-to-back repo rate hike in December, after the minutes of the Reserve Bank of India's October Monetary Policy Committee (MPC) meeting revealed a more hawkish tone, IANS reported.

Source: IANS via Tripura Times

A report by SBI Research said it continues to maintain a 50 basis points (bps) rate hike in December — either through a 'plain vanilla' 50 bps repo rate hike, or an 'exotic' 50 bps move combining a 25 bps repo hike with a 25 bps asymmetric widening of the Liquidity Adjustment Facility (LAF) corridor, taking the Marginal Standing Facility (MSF) rate to 6.25 per cent and the Standing Deposit Facility (SDF) rate to 5.50 per cent.

Source: The Hindu BusinessLine (ANI)

50 bpsDecember hike SBI Research still forecasts (yaani 0.50 percentage point)
5.50%repo rate after the MPC's unanimous October hike of 25 bps
<6.5%expected peak inflation by November, per SBI Research

'The broadening of inflationary pressures, alongside persistent rupee weakness, calls for close monitoring by the RBI and a calibrated policy response to contain inflation risks and reinforce monetary transmission,' said Dr Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India. 'We expect the peak inflation rate by November below 6.5 per cent and with these elevated levels, such generalisation warrants close monitoring by the RBI,' he added.

Door open for a December hike, says DBS

Radhika Rao, Senior Economist and Executive Director at DBS Bank, said the October minutes reflected the hawkish pivot in which the repo rate was raised by 25 bps and the stance changed to 'calibrated tightening'. Members cited rising inflationary pressures and firm growth, she said, with two external members in the most hawkish camp while two others supported only incremental hikes and rejected signalling a prolonged tightening cycle. RBI Governor Sanjay Malhotra highlighted emerging signs of inflation becoming more generalised, and with inflation set to rise to 6 per cent in the October-December quarter, 'the door remains open for a back-to-back hike in December,' Rao said.

The MPC had unanimously raised the repo rate by 25 bps to 5.50 per cent at its October 5-7 meeting and shifted its stance from neutral to calibrated tightening, signalling that rate cuts are off the table in the near term and that future action would be either a hike or a pause, depending on how inflation and growth evolve. Sources: IANS, ANI via The Hindu BusinessLine, SBI Research and DBS Bank comments reported by Nation Press.