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RBI may hike reverse repo rate up to 0.25 pc in next week's policy, says report RBI reverse repo rate

RBI may hike reverse repo rate up to 0.25 pc in next week's policy, says report

India Blooms News Service | @indiablooms | 04 Feb 2022, 01:06 am

New Delhi/IBNS: The Reserve Bank of India (RBI) may raise the reverse repo rate at which it borrows money from the banks by up to 0.25 percent and leave the repo rate at which it lends money to the banks untouched, according to 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, reported news agency PTI.

According to the report several analystas have also said a rate hike is possible. This comes after the government announced a hike in borrowing in the budget for the upcoming financial year on Tuesday.

The RBI will hike the reverse repo rate by 0.20-0.25 per cent, given its liquidity management actions, Barclays said, the report stated.

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.

It said that the inflationary pressures are unlikely to intensify before the state elections in March.


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