New delhi: It’s a fortnight to the next monetary policy review and economists have started their favourite game of trying to second guess Duvvuri Subbarao and Co. The current consensus is for a 25 basis points rate hike on 26 July.
But how often have the pundits got it wrong?
Credit Suisse’s Robert Prior-Wandesforde has tried to figure out which Asian central bank surprises the consensus the most? Our own Reserve Bank of India figures right near the top. Since 2006, the pundits have predicted one-fourth of RBI’s rate calls incorrectly. When it comes to hawkish surprises – i.e. where the central bank tightened by more than expected or didn’t cut rates as much as forecast – they have got it wrong 60% of the time.
The last time RBI surprised the markets was in May, when it increased the policy rates by 50 basis points (economists were expecting a 25 basis points hike). Is time for another?