US rating agency Fitch said on Tuesday that the Reserve Bank of India may hike interest rates by up to 5.9 per cent by the end of this year.
Releasing the outlook for the global economy, Fitch said that the Indian economy is facing the worst global conditions. Commodities prices will remain in the upper level and the effect of rising interest rates all over the world will be visible on the Indian economy.
Fitch further said that due to the fear of rising inflation, we estimate that the RBI may increase the interest rate to 5.9 percent by December 2022 and it may be up to 6.15 percent by the end of 2023, while there is no change in the estimates for 2024. .
Let us tell you, in order to control inflation, the Reserve Bank has increased interest rates twice in the last two months. Last week, the central bank raised the repo rate by 50 basis points, or 0.5 per cent, to 4.9 per cent, compared to 40 basis points or 0.4 per cent in May. RBI has projected the inflation rate to be 6.7 percent by the end of the current financial year. Retail inflation had reached 7.04 per cent in May.
Fitch said inflation is currently at an 8-year high and is spread across all categories of the CPI. Food inflation has grown at an annual rate of 7.3 per cent in the last three months, while people’s medical bills have also increased substantially during this period. Fitch has estimated that India’s GDP growth may be seen due to less cases of corona virus. For the fiscal year 2022-23, Fitch has cut its GDP growth forecast by 8.7 per cent to 7.2 per cent.
Earlier in May, S&P Global Ratings cut its GDP growth forecast for the fiscal year 2022-23 to 7.3 per cent from 7.8 per cent. At the same time, the IMF has also reduced the growth forecast from 9 percent to 8.2 percent.