As inflation eased to below the 7% mark in October, expectations of a much smaller size rate hike most likably a 35 basis points hike in RBI’s December monetary policy has taken rounds. However, there is a case where a 50 basis points hike for the fourth policy in a row cannot be ruled out. RBI’s policy outcomes revolve around CPI inflation’s performance. The country’s inflation remains elevated and above RBI’s upper tolerance limit for the tenth consecutive month.
By end of October policy, the policy repo rate stands at 5.90%. While the standing deposit facility (SDF) rate stands adjusted to 5.65% and the marginal standing facility (MSF) rate and the Bank Rate to 6.15%. MPC remains focused on the withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth.