Inflation Focus
Robust growth gives RBI space to bring inflation to target, says S&P
This story was originally published at 09:57 IST on 24 September 2024
Register to read our real-time news.Informist, Tuesday, Sep 24, 2024
NEW DELHI/MUMBAI – Robust growth allows the Reserve Bank of India to focus on bringing inflation in line with its target of 4%, S&P Global Ratings said today. The rating agency expects the RBI to begin cutting rates in October at the earliest and sees two rate cuts in the current financial year ending March.
"The RBI considers food inflation a hurdle for rate cuts. It reckons that unless there is a lasting and meaningful decline in the rate at which food prices are increasing it will be tough to maintain headline inflation at 4%," S&P said.
Earlier this month, RBI Governor Shaktikanta Das had said, "Inflation has moderated from its peak of 7.8% in April 2022 into the tolerance band of +/- 2% around the target of 4%, but we still have a distance to cover and can not afford to look the other way."
According to the RBI's projections, inflation is expected to remain above the target for the current and next year, with 4.5% in 2024-25 (Apr-Mar) and 4.1% in 2025-26.
S&P said India's GDP growth moderated in the June quarter as high interest rates tempered urban demand, but growth still remains in line with its projection of 6.8% for the full fiscal year 2024-25 (Apr-Mar). The global rating agency predicts the Indian economy to grow 6.9% and 7.0% in 2025-26 and 2026-27, respectively.
The agency said many central banks would start cutting rates later in 2024, but it would be gradual.
"Interest rate differentials with the US remain uncomfortable. Policy rates are below those in the US in all economies except India, Indonesia, and the Philippines," S&P said. End
Reported by Pratiksha and Richard Fargose
Edited by Avishek Dutta
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
