Economists expect more aggressive rate hike from RBI to control inflation

Most of the popular economists in India expect RBI to raise the repo rate more and also in an aggressive manner in the coming months to contain the inflation in India.

Recently RBI has increased the repo rate by 40 basis points and after the hike, the current repo rate is 4.40%. But some economic experts believe that this is not enough to contain inflation.

They believe that RBi needs to increase the repo rate by 100 to 125 basis points which may help to contain the soaring inflation rate.

Most the countries in the facing problem of high inflation. Recently news came to the light that the USA is also facing inflation which came after a very long year. Economist has answered that inflation is caused by the rebound of economies. Some financial institutions also said that the Russia Ukraine war caused the increased inflation to rise.

Since the war started between Russia and Ukraine the supply chain has been disrupted. The oil prices are crossed record high prices. One of the many reasons for the high inflation is the increase in oil prices in the global market.

Some private economists believe that unlike the central banks of other countries, RBI has been denying inflation for some time, but recently retail inflation has crossed over 7%. That caused to increase in the repo rate from RBI by 40 basis points. But this is not enough. According to some experts, RBI needs to increase the repo rate up to 5.75% by the end of this year and up to 6.25% by mid-2023 to control the inflation.

There is also another way which may help to contain the inflation is to reduce the taxes on petrol and diesel prices. A few months ago the government has reduced the taxes on petrol as well diesel prices but they need to lower the taxes more to contain inflation suggested by some private economic experts.

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