Growth concerns influences RBI to stall reverse repo rate hike

New Delhi, 5 Jan (KNN) According to several economists, the Reserve Bank of India (RBI) is likely to delay hike in reverse repo rate owing to the spread of the omicron variant of coronavirus.

This statement is given by economists who had earlier forecasted RBI to look for policy normalization as it would increase the reverse repo rate in its policy for next month, as published in Mint.

Commenting on this Aditi Nayar, Chief Economist at ICRA said, “Due to the rise in covid cases and growing restrictions, it is increasingly unlikely that the MPC and RBI will embark on policy noramlisation next month unless inflation provides an acutely negative surprise, the likelihood of which is subdued.”

Moreover the recent output data of core sector are not impressive as they indicated slowing momentum in the economy.

The chief economist at HDFC Bank, Abheek Barua also stated that the increase in covid cases could impact this fiscal year’s  economic growth by 40 point basis.

“A tentative first estimates for FY22 that factors the Omicron impact would be 9 per cent,” he added.

In the December 2021 fiscal stability report, RBI Governor, Shaktikanta Das had cautioned that the economy will feel the currents of global development and omicron variant.