India CPI inflation eases: Can RBI reconsider its interest rates stance? How could market react to September CPI?
livemint.comIndia's retail inflation eases to 5.02% in September, comes within RBI's tolerance mark after two months Most experts expected retail inflation to be in the range of 5.3 per cent to 5.5 per cent as they pointed out a significant decline in select food items. The recent drop in inflation to a three-month low is a significant positive development on the macroeconomic front. Notably, the September CPI inflation rate at 5.02 per cent is below the upper threshold of the RBI's acceptable range of 2 to 6 per cent.
Can the RBI go for interest rate reduction sooner than expected? (Exciting news! Mint is now on WhatsApp Channels. Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) Experts highlight that the likelihood of a rate cut in fiscal year 2024 is extremely low, given the dynamic geopolitical circumstances and variables such as the potential impact of El Nino on the winter crops (rabi crops). While the Russia-Ukraine war is still on, the Israel-Hamas war has made crude oil prices volatile.
The trajectory of crude oil prices will be a major factor that will determine domestic inflation. Besides, the monsoon season concluded with a deficit and with a significant fall in water storage in the major reservoirs as compared to long period average. Hence, the rabi crop may be impacted.
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