The Reserve Bank of India (RBI) is set to announce its bi-monthly monetary policy tomorrow (April 6), and economists believe that a change in economic stance is unlikely considering that the US Federal Reserve has recently hiked rates and moreover the fight against inflation pressure is not yet over.

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According to Pranjul Bhandari, Chief India Economist at HSBC, a 25 basis points (bps) hike is likely to be announced by Governor Shaktikanta Das. Bhandari also stated that she doesn't expect there to be a change in stance she says the uncertainty around food inflation is worrisome.

“Inflation remains pretty high, core inflation is high as informal sector growth has been good. Food inflation remains a little uncertain with what is going on in wheat. So this combination of still elevated inflation and growth being in a good place will lead to that 25 bps rate hike tomorrow,” she explained.

Also Read | RBI MPC preview : Economists expect a 25 bps hike with eye on stance change

Bhandari notes that the commentary on the RBI's stance and liquidity position will be key to watch.

“For now, I am not expecting a change of stance tomorrow. My sense is a change in stance is coming but perhaps we will have to wait for the next policy meeting and maybe that is when they will also give you a dose of liquidity which the markets are asking for but I am not expecting that tomorrow,” she said.

Also Read | RBI MPC likely to hike but may not say it’s done with hikes yet

Meanwhile, Indranil Sengupta, Head of Research and Economist at CLSA India believes that there will be a rate hike tomorrow and a 100 bps rate cut from October onwards.

“We are looking at a hike tomorrow. We think that given where the currency is, you have to keep hiking if the fed hikes and then we see 100 bps of rate cuts from October if the Fed were to stop at 5 quarter,” he said.

“If the Fed were to go back and start raising again and go to 5.75 percent then I guess the RBI will have to go to 7 percent,” he added.

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