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RBI much ahead in containing inflation but Rate hike possible

Published on June 15, 2022
Current Context: As per the SBI research report Reserve Bank is much ahead of the curve in containing inflation but it is expected that RBI will hike rates again in August and October.
RBI much ahead in containing inflation but Rate hike possible
  • It has been observed after an almost 8 years high of 7.79% in April, Consumer Price Index-based inflation moderated to 7.04% in May.
  • The report also CPI moderated in May to 6.09% compared to 6.97% in April.
  • The report also expected that the RBI could bring changes in a rate hike in August and even in October which leads to going higher than the pre-pandemic level by October to 5.5%.
  • Recently RBI raised the short-term lending rate by 40 basis points in May and 50 basis points in June, taking the repo rate to 4.9%.
  • Apart from that RBI also revised upwards its inflation projection to 6.7% for the current fiscal year.

Question:

Q.1 As per the SBI Eco Wrap Report what will be the expected hike in the policy rate of RBI in August & October?
a. 4.2%
b. 5.2%
c. 5.5%
d. 6.2%
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