India: Another rate hike is now live – ANZ

In India, the much-awaited “decisive” fall in inflation is unlikely to occur anytime soon. Thus, economists at ANZ Bank expect the Reserve Bank of India (RBI) to deliver another 25 basis points rate hike.

Pencilling in another hike

“January’s CPI inflation at 6.5% was much above the monetary policy committee’s tolerance limit, jeopardising the RBI’s near-term inflation projections.”

“Inflation built up in the food basket and stayed elevated in the core CPI basket. Among food items, higher inflation in more heavily weighted components such as staple cereals and proteins was worrying.”   

“We see a 20-30 bps upside to the central bank’s inflation projection of 5.7% for Q1 2023.”

“Since a ‘decisive’ fall in inflation is unlikely in the next few months, we now expect another 25 bps hike in April, and a change of stance to ‘neutral’ only in June.”