RBI Rate Hike Odds Rise as Inflation Risks Build

The Reserve Bank of India (RBI) is facing increasing pressure to raise interest rates due to rising inflation risks, according to economists.

Dhiraj Nim, an economist and FX strategist at ANZ Research, said that a hawkish shift by the US Federal Reserve could put further pressure on the rupee and imported inflation, making the case for an RBI rate hike stronger.

Abhishek Upadhyay, co-head of research at ICICI Securities Primary Dealership, expects inflation to remain sticky at around 6% for the next three quarters and sees a case for a 50-basis-point cash reserve ratio (CRR) hike to absorb liquidity.