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RBI likely to go for Another 0.40% rate Hike Next Week

Published on June 05, 2022
Current Context: As per the recent report, it has been estimated that the Reserve Bank of India to go for another rate hike of 0.40% at the scheduled review of the monetary policy next week.
RBI likely to go for Another 0.40% rate Hike Next Week
  • By looking at the present condition Bofa securities report stated that the central bank's rate-setting panel will follow it up with a 0.35% hike in rates at the next review in August, or make it into a 0.50% hike next week.
  • While considering the inflation the report said that already it sees the headline inflation for May to come at 7.1% due to a sharp increase in consumable goods. So it is difficult for RBI to maintain the inflation target below 6%.
  • Besides, it said the consumer price inflation will average 6.8% which is much above the RBI's tolerance limit of 6% in FY23.
  • It is expected that RBI MPC to hike the policy repo rate by 0.40% in June and 0.35% in August.
  • The report also said it also sees another 0.50% hike in the Cash Reserve Ratio (CRR) or the ratio of demand deposits parked by lenders with the RBI.

Question:

Q.1 According to a recent report released by Bofa Securities what will be the consumer price inflation?
a. 6.5%
b. 6.8%
c. 7.2%
d. 6.2%
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