How much will be the next rate hike: 35 or 25 bps?

Since the RBI is determined to ensure a soft landing of the economy through front-loading the rate hikes, the probability of a 35-bps hike at the next meeting is strong

Indian central bank’s rate setting body, the Monetary Policy Committee (MPC), at its next meeting in the last week of September will once again raise the policy rate. The question is: How much? If there is no dramatic change on the external front over the next seven weeks, yet another 50-basis points (bps) rate hike is unlikely. One bps is a hundredth of a percentage point.

It could be a 35-bps hike, which will take the policy rate from 5.4 per cent to 5.75 per cent. One can’t entirely rule out even a smaller dose, a 25-bps hike.

Since the