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[BUSINESS] · India · 4 sources

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Part of situation: RBI raises repo rate to 5.50% amid rising inflation (8 clusters)

RBI repo rate may need to reach 6.25% to curb inflation, says SBI Funds Management

Reserve Bank of India repo rate inflation monetary policy SBI Funds Management

SBI Funds Management has indicated that the Reserve Bank of India (RBI) may need to increase its benchmark repo rate to at least 6.25% to effectively manage persistent inflation risks. This assessment suggests a potential total increase of 75 basis points from the current level, following a recent 25 basis point hike that brought the rate to 5.50%.

The recommendation follows a rise in India's inflation metrics. Retail inflation climbed to 5.54% in September from 4.83% in August, while wholesale inflation accelerated to 11.39% from 9.92%. SBI Funds Management noted that a 6.25% rate would be necessary to maintain a real interest rate of approximately 1%.

Looking ahead, the fund house warned that factors such as elevated crude oil prices, food inflation, and strong domestic demand could cause inflation to exceed the RBI's 6% upper tolerance limit for two consecutive quarters. Consequently, the near-term outlook for policy rates is expected to be limited to either rate hikes or holding current levels, with rate cuts considered unlikely.

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India · Reserve Bank of India · SBI Funds Management

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Sources

RBI may need to raise repo rate to 6.25% as inflation risks persist: SBI Mutual Fund [desitalkchicago.com]
Business News | RBI May Need to Raise Repo Rate to 6.25% as Inflation Risks Persist: SBI Mutual Fund [www.latestly.com]
RBI may need to hike repo rate to 6.25% to curb inflation: SBI MF [newsable.asianetnews.com]
RBI conducts ₹1L crore VRR auction to enhance banking liquidity [www.newsbytesapp.com]