Amid retail inflation showing signs of moderation and the need to push growth, the Reserve Bank of India (RBI) may signal a slower pace of tightening at its upcoming monetary policy review on Wednesday.
The RBI may opt for a lower rate increase of 25-35 basis points in lending rates after three back-to-back 50 basis points hike in interest rates, experts believe.
RBI Governor Shaktikanta Das headed six-member rate setting panel is scheduled to meet for three days beginning Monday to take a call on the next set of monetary policy.
The central bank will come out with its bi-monthly policy review on 7 December at the end of the three-day meeting.
Apart from the domestic factors, the RBI committee is expected to take some cues from the US Federal Reserve, which hinted at a lower rate hike of 50 basis later, in the month.
In order to calm down inflation, the US Fed had earlier hiked the key interest rates four times by 75 bps each.
Industry body Assocham has asked the RBI to moderate the interest rate hikes so that it does not have adverse impact on nascent economic recovery.
RBI's monetary policy outcome is likely to play a major role in setting the tone for domestic equities. The movement in markets will be determined by the outcome of the RBI policy meeting.
(With inputs from agencies)