Despite inflation, cheap loans will continue to be available, UBS estimates - interest rates will not increase till August

Despite inflation, cheap loans will continue to be available, UBS estimates – interest rates will not increase till August

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New Delhi. The Reserve Bank of India (RBI) will not change policy rates for the next 6 months, despite the possibility of retail inflation rising to 6.01 percent in January, and not reducing it till April. Swiss brokerage UBS Securities believes so. It also believes that in the second half of the year, which will start from August, the Monetary Policy Committee (MPC) may increase the policy rates by 50 basis points.

Tanvi Gupta Jain, Chief Economist, UBS Securities India, said on Tuesday that the latest inflation figures are largely in line with estimates and are behind adverse base effect and supply-related aspects. He said that the monetary policy committee of the Reserve Bank will refrain from increasing policy interest rates in the first half of the year 2022, despite the increase in retail inflation and its forecast to remain around 6 per cent till April.

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Interest rates may increase in August

According to the retail inflation data announced on Monday, it has gone up to 6.01 percent in January. Apart from this, the wholesale inflation rate has been in double digits at 12.96 percent. However, he said that in the second quarter of this year, the Monetary Policy Committee may take a decision to hike interest rates by half a percentage point in August.

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Significantly, only last week, the Reserve Bank of India (RBI) did not change the key policy rate repo for the 10th time in a row on Thursday to give impetus to the economy affected by the Kovid-19 epidemic and kept it at a low of four percent. Keeping the policy rate unchanged means that there will be no change in the monthly installment of the bank loan. At the same time, the RBI maintained a lenient stance on the policy issue amid high inflation rates.

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