The new Omicron covid variant-led concerns are unlikely to deter the Reserve Bank of India (RBI) from hiking key rates by 20 bps next week, Barclays Chief India Economist Rahul Bajoria said in his latest note published Tuesday.

Key quotes

“Despite the emergence of a new COVID variant, we believe the RBI is likely to acknowledge the positive sentiment prevailing in India by raising its growth forecasts upwards during next week's policy review, reflecting the strong pickup in aggregate demand,”

“We believe gradualism will remain the preferred approach, especially in light of the emergence of a new COVID variant. While the new Omicron strain is unlikely to shift macro assumptions, it may add downside risks to baseline forecasts.”