Key Points
BENGALURU - The Reserve Bank of India (RBI) will keep interest rates unchanged until at least July, a bit longer than the U.S. central bank is expected to do so, on strong growth and still-elevated inflation, according to a firm majority of economists polled by Reuters...
Inflation, which is still close to the upper band of the central bank's 2%-6% target, does not hint at an imminent rate cut...
"The combination of headline inflation remaining above 5% and the strong Q4 GDP figures will likely leave Monetary Policy Committee (MPC) members cautious about cutting rates too soon," said Alexandra Hermann, a lead economist at Oxford Economics.. "While the year-long downward trend in core inflation will be seen as encouraging, MPC members will likely not deem this sufficient and rather err on the side of caution, waiting until the headline numbers are on a clearer downward path towards the 4% mid-point target."..
The U.S. central bank is currently expected to deliver its first cut in June, a separate Reuters poll showed, but the risks are growing for that to happen later in the year...
"While the Fed has already indicated policy rates are likely to be reduced in the coming months, the growth and inflation dynamics in India suggests the RBI may just keep rates elevated for longer," wrote Aditi Gupta, an economist at Bank of Baroda...
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