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India Inc Asks RBI To Moderate Pace Of Monetary Tightening

The next Monetary Policy Committee meeting will be held between December 5 and 7

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Confederation of Indian Industries (CII) has requested the Reserve Bank of India (RBI) to moderate the pace of its rate hike in the upcoming monetary policy meet, as the prevailing global 'polycrisis' is likely to impact the country’s domestic demand and growth prospects.

“India Inc has also started to feel the adverse impact of the 190 basis points (bps) hike in repo rate so far in this fiscal. Hence, RBI must moderate the pace of its monetary tightening ahead of the forthcoming policy,” the industry body said.

The next Monetary Policy Committee (MPC) meeting will be held between December 5 and 7.

"Given the headwinds to domestic growth mainly emanating from the global uncertainties, the RBI should consider moderating the pace of its monetary tightening from the earlier 50 basis points," CII wrote to RBI in its expectation on the December monetary policy.

CII said while it is in cognisance of the fact that RBI’s interest rate hikes of 190 bps so far in this fiscal have been warranted to tame inflationary pressures, the corporate sector has now started to feel its adverse impact. 

However, given the sticky core inflation at around 6 per cent, the RBI could consider hiking the key interest rates by an additional 25 to 35 basis points to tame inflation, it suggested.

CII further stated that incipient signs of domestic recovery must be preserved to help accelerate movement towards a normalised growth scenario.