may increase so much
According to media reports, most economists are expecting RBI to hike its rate by around 35 bps from the 50 basis points (100 bps = 1 percentage point) announced after the last three MPC meetings. Although CII has suggested a rate hike between 25-35bps. The lower rate hike is expected after consumer inflation eased below 7% in October.
There has been a decrease in the profits of companies
According to CII, given the constraints on domestic growth arising mainly from global uncertainties, the RBI should first consider reducing the repo rate by 50 bps. According to CII’s analysis, a large number of companies have reported a decline in income and profits in the second quarter (July-September 2022) of the current financial year. In such a situation, CII argued that there is a need to reduce the pace of monetary tightening. So far the industry has been supportive of RBI’s rate hike, which is up to 190 basis points from May 2022, but corporates are now beginning to feel the adverse effects. CII’s analysis of results of 2,000 companies in the second quarter (July-September 2022) shows that both topline and bottomline moderated on a sequential and annual basis.
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