Mumbai, Jan 30 (KNN) According to a Reuters poll of economists, the Reserve Bank of India (RBI) is likely to hike its interest rate by a modest 25 basis points (bps) to 6.50 per cent next month.

A meeting will be held after the presentation of Union Budget 2023 on February 1.

More than three-quarters of economists, 40 of 52, expected the RBI to raise its key repo rate by 25 bps to 6.50 per cent, according to a January 13-27 Reuters poll. The remaining 12 predict no change at the February 8 meeting.

The median forecast was for rates to remain at 6.50 per cent until the end of 2023.

Chief economist at Kotak Mahindra Bank, Upasna Bhardwaj said that the central bank needs to pause at some point to gauge the impact of the previous monetary tightening on growth and inflation.

With the December rate hike, the policy repo rate has climbed to a whopping 225 bps so far in FY23. At present, the repo rate is at 6.25 per cent.

For FY23, RBI's first rate hike was 40 bps in May, followed by three consecutive rate hikes to the tune of 50 bps each between June to October, and then some softening to 35 bps in December policy.

Depositors will cheers if another rate hike by RBI is announced next month.

When RBI hikes the policy repo rate, both fixed deposits and lending rates are likely to go up as well.  (KNN Bureau)