RBI Could Hike Repo Rate To 6.75% In 2023: Report

The RBI has raised repo rate by 225 basis points since May to 6.25% as it continues its fight against inflation.

The Reserve Bank of India could take the key policy rate to 6.75% next year, as core inflation stays elevated and the U.S. Federal Reserve continues to hike rates, treasury head of IDBI Bank said today.

"The focus will now be on core inflation that continues to be above 6%. Some other components in inflation have also shown an uptick. So, it is too early to say that inflation has come within the RBI's tolerance band," Arun Bansal, executive director, and head of treasury at IDBI Bank, said in an interview.

"The RBI will also have to be mindful of the rupee's depreciation and the narrowing interest rate differential with the U.S...There is still a 60% probability that the terminal repo rate is hiked to 6.75%."

The RBI has raised repo rate by 225 basis points since May to 6.25% as it continues its fight against inflation. In contrast, the U.S. Federal Reserve raised interest rates by 425 bps to 4.25%-4.50%.