RBI expected to hold policy rate again at next review meeting: Crisil

economictimes.indiatimes.com:

Reserve Bank of India is expected to again hold the policy rate in the next meeting, as the central bank awaits a clearer picture on the inflation trajectory, said Crisil in a report.RBI's next monetary policy meeting is scheduled for early October. «Uncertainty on the inflation trajectory has increased with the recent flare-up in food prices. Monsoon and weather disruptions, along with government interventions and global food supply will influence inflation outcome,» said the report titled 'RateView — CRISIL's outlook on near-term rates'.

A 25 basis point rate cut in early 2024 is a conditional possibility for now, it asserted. The RBI kept policy rates unchanged in the August meeting while maintaining its stance of 'withdrawal of accommodation'. However, it introduced Incremental Cash Reserve Ratio (I-CRR) as a temporary measure to manage liquidity.

Taking into consideration the latest uptick in the retail inflation figures, Crisil upwardly revises India's inflation outlook for 2023-24 to an average of 5.5 per cent from its earlier estimate of 5.0 per cent. «With the sharp surge in the July CPI print, and early signs that August would see minimum relief on food prices, the upside risks to our inflation forecast have materialised,» the report said. Notably, Retail inflation in India has surged to 7.4 per cent in July from 4.9 per cent in June.

The latest rise in inflation could partly be attributed to the current spurt in tomato and other vegetable prices across India. The rise in tomato prices is reported across the country, and not just limited to a particular region or geography. In key cities, it rose to as high as Rs 150-200 per kg.