Here is what they say:
Upasna Bhardwaj, Chief Economist: The 50 basis point rise in the repo rate comes against the backdrop of continued high inflation and continued upside risks. Given that inflation is expected to remain above 6% until 3QFY23, RBI must price equities ahead. We continue to see another 60-85 basis point hike in the rest of FY23 to manage inflationary expectations.
Abheek Barua, Chief Economist: The RBI is concerned about the broad-based nature of the rise in inflation and the risk of a secondary impact on inflation expectations. As a result, the policy rate should be raised well beyond the pre-pandemic level, to almost 6% by the end of the fiscal year.
Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities: The policy tone continues to be hawkish and we expect the RBI to continue raising the repo rate to ensure a neutral to marginally positive real policy rate. We expect a 35 basis point hike in the repo rate in August policy to 5.25% and a repo rate to 5.75% by the end of fiscal 2023. In addition to pushing the repo rate above the pre-pandemic level, a rise of 35 basis points would also signal a gradual normalization of political actions while being sufficiently hawkish. We also expect a further 50 basis point increase in CRR to 5% by the end of FY2023 to bring liquidity conditions back to pre-pandemic levels.
Arun Kumar, Head of Research, FundsIndia: With this hike, RBI is closer to bringing the repo rate back to pre-covid levels of 5.15%. The RBI has clearly acknowledged the inflation risks mainly related to food and commodity prices and has revised its inflation projection for FY23 upwards by 100 basis points to 6.7% (from 5 .7% at the April meeting). The inflation range of 2% to 6% should now be exceeded for three consecutive quarters. Against this backdrop, RBI is expected to accelerate its rate hike actions.
Madhavi Arora, Senior Economist, Emkay Global Financial Services: FY23 could therefore still see rates rise by more than 75 basis points, with the RBI now showing its intention to keep real rates neutral or above to quickly reach pre-Covid levels. Our Taylor estimate shows a maximum policy rate tightening of 6% by FY23, of which a liquidity tightening to 2% NDTL is equivalent to another estimated 25 basis points increase in the effective rate.
Rajni Thakur, Chief Economist: With multiple risks to price levels driven largely by external factors, rate hikes will help anchor inflation expectations and have much less impact on actual inflation outcomes. It also makes it difficult to assess a terminal rate level for the cycle, although expectations of continued rate hikes to pre-Covid levels have been bolstered by the fact that the monetary policy stance has shifted. of “accommodating with an emphasis on withdrawing cash”. “to” favor the withdrawal of housing “. We now expect another 50bp rate hike in August, lifting Repo rates above pre-Covid levels, followed by a pause to re-access macro dynamics and smaller hikes thereafter. , pushing year-end Repo rates to nearly 6% levels.