RBI to hold rates for a while before another rate cut: HSBC

RBI to hold rates for a while before another rate cut: HSBC

17/08/2017 17:02

A report has said that inflation numbers have risen as expected and the Reserve Bank will go in for a prolonged pause before cutting rates again.

Commenting on the issue, a British brokerage HSBC Official told the media, “We expect the RBI to be on a prolonged pause from here onwards with the risk of a 0.25 per cent rate cut (to our assumption) by the year-end if retail inflation undershoots the 4 per cent target by a comfortable margin.”

The brokerage attributed the jump in inflation numbers to rising vegetable prices, but underlined that core inflation excluding food, fuel ticked up after moderating for three straight months.

“We expect the HRA impact to show up further over the next six months. Thankfully, the RBI has mentioned that it will overlook this direct statistical impact of HRA, so prima facie, the rise in core inflation is nothing to worry about,” he added.

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