The latest survey of economists by Bloomberg shows that India’s central bank, the reserve Bank of India (RBI), is likely to raise interest rates by December which will take the repurchase rate to 6% by the end of this year.

Following three moves totaling 140 basis points since May, economists anticipate another 35 basis point hike in the September monetary policy review, followed by a quarter-point increase in December, bringing the main interest rate to 6%. According to a previous survey, the repo rate will reach 6% by the end of June 2023.

The rate hike expectations come despite economists predicting a slowing of inflation due to a drop in global commodities and the alleviation of supply chain bottlenecks.

Consumer prices are expected to fall to 6.6% from 6.76% in the fiscal year ending March 2023, but remain above the central bank’s 2%-6% target range.

According to the survey, wholesale prices are expected to fall to 10.95% before falling to the low single digits in the next fiscal year through March 2024.

Meanwhile, gross domestic product is expected to rise 15.3% year on year in the three months to June, while gross value added is expected to rise 14%. According to the same survey, growth may slow to less than 6% in the July-September quarter as a result of global concerns.

“India is not immune to a US recession,” said Teresa John, an economist at Nirmal Bang Equities. “Stable domestic fundamentals in terms of the strong financial sector and non-financial sector balance sheets, high foreign exchange reserve and some counter-cyclical fiscal policy ahead of elections in FY 2024 will limit the growth slowdown.”

Also, Read US Dollar Reaches 20 Year high Fed Signals Higher Interest Rates for Longer

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