Economists see RBI delivering another 50 bps hike next week

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MUMBAI: Economists are unanimous in forecasting that the central bank has no other option but to deliver a 50 bps rate hike next week and take the terminal rate to 6.25 per cent by December.
Economists from SBI, UBS, Goldman Sachs, Barclays and Bank of Baroda in a rare unanimous call see the RBI-led monetary policy committee delivering a 50 bps hike on September 30, taking the overall repo rate increase 290 bps to 5.90 per cent since May this year.
Soumya Kanti Ghosh, the group chief economist at the nation’s largest lender SBI, in a detailed note on Monday said, a half-percentage point hike in the repo rate looks imminent in an aggressive response to external shocks.
“We expect the peak repo rate in the cycle at 6.25 per cent. A final rate hike of 35 bps is expected in December policy,” he said.
Liquidity has become deficit after 40 months which looks like another headwind for the…

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