The Reserve Bank of India's (RBI) two-day monetary policy (MPC) meeting is underway and Governor Shaktikanta Das will announce the policy decisions tomorrow (April 6). Most economists (90 percent) that CNBC-TV18 spoke to while doing a survey said that they expect the Indian central bank to continue its fight against inflation and follow the US Federal Reserve globally by hiking the lending rate by 25 basis points.

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The economists added that it looks like the rate hike cycle is nearing its end but before RBI well and truly changes course, there could be one more hike. The 25 bps hike, should the RBI go for it, will take the repo rate (lending rate) to a seven-year high of 6.75 percent.

Earlier, there was a thought that the RBI might be done with rate hikes but the fight against rising prices has meant that inflation is stubbornly above RBI’s comfort level. The other area of consideration for the MPC is going to be activated by other global central banks, but the Shaktikanta Das led team has maintained that it is guided by domestic factors.

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All of the respondents to CNBC-TV18’s poll said that the April hike will probably be the last one in the current monetary tightening cycle, which began in May last year.

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

The peak rates are seen at 6.75 percent by the majority. But after this rate hike, RBI is expected to pause for a while before it starts to reverse these hikes. So 40 percent of our respondents believe that we could only see cuts in the second half of this financial year whereas a third expect the first rate cut to only be delivered in the first quarter of the next financial year, 30 percent expect it to happen perhaps sooner.

Now RBI could also raise the consumer price index (CPI) forecast for FY23 marginally given the unexpected high inflation readings recently, while leaving the 5.3 percent CPI forecast for FY24 unchanged.

The RBI is also unlikely to tinker with the growth forecast, although some expect a marginal lowering.

Also Read | RBI expected to deliver 25 bps hike on April 6, rate cut by December 2023

Almost 30 percent of the respondents said they expect the stance of the policy to also be changed to neutral, but a much larger majority of 70 percent believe it will be left unchanged at withdrawal of accommodation because RBI may not yet be comfortable enough to signal that they are done with the rate hikes given the global uncertain outlook.

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(Edited by : Abhishek Jha)

First Published:Apr 5, 2023 11:05 AM IST