RBI Rate Hike Coming? Barclays’ Aastha Gudwani Explains Why 50 Bps May Be Too Much

The Reserve Bank of India’s upcoming Monetary Policy Committee meeting centers on the potential for a 25 basis point rate hike, the first since February 2023, driven by persistent inflation and robust economic growth. With CPI consistently exceeding the 4% target and crude oil prices hovering near $100 per barrel, market expectations lean toward tightening. Aastha Gudwani, India Chief Economist at Barclays, suggests that while a rate hike is likely, the central bank will likely maintain a neutral stance, as financial conditions have already tightened significantly due to global factors and rising bond yields. Furthermore, the RBI is expected to manage liquidity through ongoing market operations rather than aggressive policy shifts, balancing the need to curb inflation without dampening economic sentiment ahead of the festive season.