Raise rates by 25-35 bps: Economists to RBI

Economists on Friday suggested top officials of the Reserve Bank of India to raise interest rates by 2535 basis points (bps) next month while continuing to signal vigilance on inflation, sources told Business Standard.

- BHASKAR DUTTA

The meeting was held ahead of the RBI's next monetary policy review, which is scheduled December 5-7.

The economists also recommended that the RBI maintain its current stance of remaining "focused on withdrawal of accommodation," sources said.

"Today, most people were recommending a 25-35 bp rate hike and for them (the RBI) to speak hawkish. Hike less but speak hawkish. They also recommended that the stance be kept the same. That was the general feedback. They (RBI) didn't say much, as usual, just heard them out," a source said.

"The rationale would be that it would be difficult for them to prematurely signal any softening of policy when you have such external volatilities and the trade balance being the way it is. Unless FPI flows show some sense of stability returning they would have to be cautious," the source said.

An email sent to the RBI did not receive a response by the time of going to press.