Synopsis
Economists, stock market analysts are baffled by RBI’s rate hike as it was only a month ago that the central bank indicated that it had no intention of raising interest rates. Some experts say that since India’s inflation is driven by supply-side disruptions, a hike may not help. But is anyone looking at the falling rupee?
On May 4, 2022, the Reserve Bank of India (RBI) surprised the markets and economists alike. RBI Governor Shaktikanta Das, in an unscheduled 15-minute monetary policy statement, announced a hike in repo rate by 40 basis points and cash reserve ratio (CRR) by 50 basis points. This was the first rate hike since August 2018, which signaled the reversal of the reduction cycle with another 75-100 basis points increase expected this year. The economy
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