Reserve bank of India likely to remain on hold in 2018, may hike by 25bps in February 2019 - ANZ
Source: FxWire Pro - Commentary / 17 Aug 2018 09:27:58 America/New_York
The Indian central bank released the August meeting minutes today. Most Monetary Policy Committee members have the same optimistic sentiment regarding growth and concern about the upside risks to inflation. Members were assertive that the economic growth rebound from private consumption and public capital spending in infrastructure and construction is sustainable.
However, some members were of the view that increasing trade tensions might affect exports and private investment, noted ANZ in a research report. The MPC underlined continued risks to inflation from increased oil prices in terms of Indian rupee, firming household inflation expectations, and increases in the Minimum Support Price for agricultural crops. The closure of the output gap was also cited as a concern.
Out of six members, five noted that the MSP revisions continue to be an upside risk to inflation, although the magnitude will depend on the procurement policy. One member noted that the effect of MSPs is highly uncertain; incorporating it in the rate decision is prudent only after its implementation, noted ANZ.
“We continue to expect the RBI to remain on hold in 2018 and implement a 25bps hike only in February 2019”, added ANZ.© FxWire Pro 2018. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.