Goldman Sachs raises India’s GDP growth forecast to 6.7% for 2024; expects RBI repo rate cut in December quarter

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Also Read: India's economy likely slowed to an annual 6.7% in January-March, its weakest pace in a year, finds report"Going forward, we expect investment growth momentum to sustain with extra fiscal space for infrastructure spending given a higher than expected dividend transfer by the RBI. As a result, we recently revised our growth forecasts for CY24 slightly higher by 10 bps to 6.7% YoY," Goldman Sachs analysts Santanu Sengupta, Arjun Varma and Andrew Tilton said in a note.India’s growth momentum remains strong and they expect the core inflation will bottom out in April-June 2024 and be around 4.0% - 4.5% in H2CY24.Meanwhile, the Monetary Policy Committee (MPC) members from the RBI have sounded cautious on sticky food inflation owing to supply side disruptions due to the ongoing hot weather conditions in many parts of India.

Also Read: Above-normal rains seen, says IMD; monsoon over Kerala in five days“In our view, they may want to see progress of the monsoons and sowing of the summer (Kharif) crop to assess the food inflation trajectory in 2H CY24, before pivoting towards monetary policy easing," the Goldman Sachs report said.Taking into account these developments, Goldman Sachs has pushed its RBI rate cut call back by one quarter to October-December 2024 quarter as against July- September quarter earlier, with the first cut most likely in the December 2024 meeting. “We continue to expect a shallow easing cycle of total 50 bps rate cuts from the RBI, with 25 bps rate cuts each in Q4 CY24 and Q1 CY25," the analysts said.Also Read: RBI dividend boost to help in improving budget mathThe timing of the first rate cut by the RBI remains a difficult question as domestic growth remains strong, which, along with a sticky