Banks expect RBI to hike rate by 25 bps on Tuesday

Leading lenders Standard Chartered and HDFC Bank today said they expect the Reserve Bank to hike its short-term lending rate by 25 basis points in the forthcoming monetary policy,a view echoed in an RBS survey of money market participants.

We see a 25 bps increase in the repo rate at the 26 July policy as inevitable…inflation management will remain the priority,but policy statement is likely to be less hawkish, StanChart said in a note.

Similarly,a majority 71 per cent of the 151 respondents in a Royal Bank of Scotland (RBS) survey opined that they expect the monetary authority to go in for yet another spike in its key rates by 25 bps,while 5 per cent said it could be 50 bps,and 24 per cent see the RBI leaving the rates unchanged.