RBI Rate Cut Is Just Possible After July 2024: Icra

On Monday, local rating agency Icra said that it anticipates the Reserve Bank will only lower rates during the quarter of July to September in 2019.

According to the organization, there would be “shallow” total cutbacks of 0.50-0.75 percent over the cycle.

According to the agency, the RBI may only raise interest rates if headline inflation stays over 6% for two consecutive quarters.

The agency stated: “Based on the MPC’s (Monetary Policy Committee) recent predictions, we have pushed off our forecast for the earliest reduction to Q2 FY2025. The MPC’s current forecasts imply inflation will continue over 5% through Q1 FY2025.

Consumer price inflation (CPI), according to the official figures issued on Monday, surged to a 15-month high of 7.4% in July. “The data for food prices for early August 2023 are not very promising,” the company’s chief economist Aditi Nayar said. “We expect the headline CPI inflation to print above the 6.5 per cent mark in August, before cooling off materially in September.”

She blamed veggies as well as several other foods including pulses, spices, and grains for the much higher than anticipated increase in July.

She said that if veggies were taken out of the equation, the CPI would have been 5.4%, which she described as “relatively tolerable”.