TIL Desk/Business/New Delhi/ The Monetary Policy Committee (MPC) may go for a hike of up to 0.25 per cent in the reverse repo rate at which the RBI absorbs excess liquidity and leave the repo rate at which it lends, to narrow the policy rate corridor, a British brokerage said on Thursday.
“Growth concerns amid spread of the Omicron variant and relatively benign inflation out-turns provide the RBI with enough room to maintain its growth-supportive monetary policies,” analysts at Barclays said, ahead of the resolution announcement next week.
The RBI will hike the reverse repo rate by 0.20-0.25 per cent, given its liquidity management actions, it said. The brokerage joins a growing list of watchers expecting a reverse repo hike. Other analysts also blame the surprising hike in the government borrowing announced in the budget for the RBI’s likely call for policy normalisation.
Barclays said the budget’s focus on capital expenditure is expected to provide a back-loaded fiscal impulse to the economy and does not change the macro backdrop, which includes concerns on inflation.
