"The RBI will continue to remain non-committal on the future rates path, as the fluid global situation demands frequent macro re-assessments," Madhavi Arora and Harshal Patel, economists at Emkay Global wrote in a note. (Reporting by Swati Bhat; Editing by Janane Venkatraman)
+91-22-69217812; Reuters Messaging: swati.bhat.thomsonreuters.com@reuters.net)) By Swati Bhat
MUMBAI, March 14 (Reuters) - India's monetary policy
committee is likely to deliver the expected 25-basis point (bps)
rate hike in April, even as global markets lowered rate hike
bets from the U.S. next week following the banking crisis,
economists said on Tuesday.
India's headline and core inflation has been unrelenting,
with data post market close on Monday showing annual retail
inflation remained above the Reserve Bank of India's (RBI) upper
limit, easing only slightly from January's 6.52%.
"We expect the focus to remain on reducing inflation, both
globally and in India," Gaura Sen Gupta, economist with IDFC
First Bank, said on Tuesday.
"Policymakers are likely to use other tools to ringfence
financial institutions and use rate hikes to tame inflation."
Globally, investors scrambled to pull down rate expectations
on Monday and abandoned bets on the Federal Reserve pushing
through bigger hikes, reckoning the biggest American bank
failure since the 2008 financial crisis will make policymakers
think twice.
"We continue to expect the RBI to hike policy rates by 25
bps in April. The January and February prints will only increase
the (RBI's) concerns on core inflation showing persistence,"
said Sen Gupta.
Economists said the February inflation print has
significantly raised the probability of the central bank's 5.7%
inflation projection for the quarter ended March 2023 being
missed.
"Overall, the worst period of high inflation is likely
behind us. We expect March inflation to come around 6% and to
retreat toward 5% in the coming months," Motilal Oswal analysts
wrote in a note, saying the 25-bps hike in April was a "given".
Investors and economists will closely monitor the U.S.
consumer price index print due later on Tuesday and the Fed
policy outcome on March 22.
Both will be critical inputs for the RBI monetary policy
committee's meeting on April 3-6.
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