RBI likely to keep repo rate in October policy: meet experts


According to government data, annual retail inflation declined slightly on Monday, but food inflation declined on Monday.

August retail inflation was 6.69 percent, down from 6.85 percent forecast in analysts’ Reuters poll and 6.73 percent in July.

What experts say on the number of August inflation:

Aditi Nair, Principal Economist, ICRA, Gurugram

“With CPI inflation sticky at a sharp 6.7 percent rate for August 2020, and unlikely to decrease significantly in September 2020, a repo cut in the upcoming policy review is virtually dismissed.”

“Furthermore, CPI inflation is expected to print only sub-4 percent in December 2020 and February 2021, based on which the continuation of the adjustment stance appears doubtful.”

Kunal Kundu, Economist of India, Society General, Bengaluru

“While the RBI still has an upper target limit of over 6 percent, August data may mean inflation is finally at its peak and going down slowly. Even July inflation revised up from 6.89 percent The tax has increased to 6.73 percent. “

“We believe that high levels of high inflation are transitory and will not last long, especially in the event of such widespread demand destruction.”

“We expected headline inflation to fall significantly by 4Q20 as food prices plummeted and the higher statistical base effect drives headline inflation further down. We expect the RBI to substitute an additional 50 basis point rate cuts Can choose, possibly 4Q starting 2020. “

Garima Kapoor, Economist – Institutional Equities, Elara Capital, Mumbai

“August’s CPI inflation of 6.69 per cent is a surprise on the downside compared to our expectation of 7 per cent. Even with headline prints remaining high due to unfavorable basis, lower incremental declines in components such as food and drink and downward Further revision. Last month’s data was reassuring. We believe the improvement in data collection efficacy is contributing to that. “

“While we expect the headline inflation trend to ease in the coming months as seasonal volumes increase and chain supply returns to normal, inflation prints will remain above 6 percent in September, leading to MPC capacity May decrease. “

Angha Deodhar, Economist, ICICI Securities, Mumbai

“In sequential terms, the headline number has been reduced from 6.69 percent to 6.69 percent. However, it is still significantly higher than the upper limit of the MPC’s comfort level.”

“Persistently high food inflation points to supply inflation to high inflation. In addition, transportation inflation rose to an all-time high in the new series and personal care cost inflation rose to a 101-month high in August. . “

“Key inflation moderated from 5.9 percent to a modest 5.8 percent. We expect inflation to only come down significantly in the second half due to favorable base effects. We do not expect a moderate easing in the current print to scale Tilt to the side. ” A rate cut. “

Sakshi Gupta, Senior Economist, HDFC Bank, Gurugram

“Inflation came close to our expectation for August (HDFC Bank’s estimate of 6.6 percent), indicating that the price pressure has increased in July. Our inflation is expected to be above 6 percent in August print and September. . Space for monetary action is almost absent in October. We expect a rate cut of 25-50 bps in a contingency meeting in December and February on inflation estimates. “

“We expect inflation for the year to exceed 5 percent on average. After today’s slightly positive inflation, bond yields may moderate marginally tomorrow. However, given the borrowing pressure, we expect Let 6 percent be the floor for 10. year in the near term. “

Upasana Bhardwaj, Senior Economist, Kotak Mahindra Bank, Mumbai

“Although CPI inflation readings are rising uncontrollably, it is beginning to decrease, providing some relief. However, many uncertainties remain, as supply-side constraints dominate weak demand-side pressures, as well as a -While passively factors weigh on the core. Inflation. Going forward, as inflation persists in the near term, we see that limited room for policy is easier, at least through the December policy. “

Madan Sabnavis, Chief Economist, Care Ratings, Mumbai

“Quite frankly the MPC will keep this number in the back of the mind when evaluating its decision in the next meeting. Inflation is above the 6 per cent threshold, while growth has slipped quite rapidly. Liquidity conditions during bank account growth Is comfortable. Has been negative. Under these conditions the decision may lead to another stagnation in policy action. “

Rupa Rege Nature, Group Chief Economist, L&T Financial Holdings, Mumbai

“The CPI headline is closer to 6.7 percent than I had anticipated. While the rate of pulses and fuel inflation has progressively decreased somewhat, overall food, housing and core inflation increases have pushed the print higher at 6.7 percent. Has kept – the way above the RBI. Convenience sector. I do not expect any rate action in the remaining part of calendar 2020. There is no requirement for this. RBI is supporting yields through liquidity support, which is More than enough. “

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