Inflation is expected to moderate to 4.5 per cent to 4.75 per cent by March 2017 and the RBI is likely to go for a 0.50 percentage point cut in this fiscal, says a Morgan Stanley Report.
According to the global financial services major, inflation will remain on a moderating path, with near-term readings likely undershooting RBI's trajectory.
"With our forecast of CPI inflation at 4.5-4.75 per cent for quarter ended March 2017 (lower than RBI's expectation of 5 per cent) and RBI's lower real rate target of 1.25 per cent, we expect a further 25-50 bps of rate cuts by March 2017," Morgan Stanley said in a research note.
Easing food prices is the key factor driving the moderation in inflation. Other drivers of inflation include -- rural/urban wages, global commodity prices, disinflation from excess capacity, and fiscal consolidation
According to the global financial services major, inflation will remain on a moderating path, with near-term readings likely undershooting RBI's trajectory.
"With our forecast of CPI inflation at 4.5-4.75 per cent for quarter ended March 2017 (lower than RBI's expectation of 5 per cent) and RBI's lower real rate target of 1.25 per cent, we expect a further 25-50 bps of rate cuts by March 2017," Morgan Stanley said in a research note.
Easing food prices is the key factor driving the moderation in inflation. Other drivers of inflation include -- rural/urban wages, global commodity prices, disinflation from excess capacity, and fiscal consolidation
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