INSUBCONTINENT EXCLUSIVE:
Professionals say that the reverse repo rate might be revised by end of fiscalThe nation's yearly retail inflation eased to 5.59 per cent in
July from 6.26 per cent the previous month, federal government data released on Thursday revealed
Experts in a Reuters survey had actually predicted yearly inflation at 5.78 per cent.Aditi Nayar, Chief Financial Expert, ICRA, Gurgaon:
With inflation expected to remain sticky in the 5 per cent- 6 percent variety over the next three quarters, it's progressively tough to
characterise the pressures as simply temporal in nature
We prepare for that the MPC will start policy normalisation when domestic demand reinforces and begins dominating inflationary pressures, in
place of supply-side issues
We anticipate a modification in the position to neutral from accommodative in the February 2022 policy review, followed by a walking in the
repo rate of 25 bps each in the April 2022 and June 2022 reviews
When the lift-off begins, our company believe that the MPC will stagger rate boosts over an amount of time, instead of immediately trying to
press real rates of interest back into the positive area
Sakshi Gupta, Senior Financial Expert, HDFC Bank, Gurugram: Moving forward, while inflation readings could moderate further due to a high
base effect in September and October, inflation could inch up again to 6 percent by Q4 FY22
The details on inflation readings recommend that inflationary pressures are more broad-based as compared to the similarity the U.S
where they are being led by just a few categories (the re-opening impact)
This along with the truth that inflation expectations in India are also rising, requires some care over the inflation trajectory or reading
Sreejith Balasubramanian, Financial Expert - Fund Management, IDFC AMC, Mumbai: The July CPI print of 5.6 per cent remained in line with our
expectation and we believe the 6.3 per cent in June should be the peak for a few months, also given base results in play till November
It will be important to track any sustainable recovery in demand (apart from the bottled-up portion) that generally creates rate pressures,
which are more sticky however responsive to monetary policy unlike supply-side pressures
The course of food rates which are witnessing a moderate softening in particular categories of late, sector-specific supply changes,
services inflation alongside manifestation of pent-up need, product prices and the course of the pandemic will be equally important
Prithviraj Srinivas, Chief Financial Expert, Axis Capital, Mumbai: CPI inflation can be found in lower than our and agreement expectations
of 5.8 percent, generally due to food inflation can be found in lower than expected
Costs continue to increase sequentially as companies hand down higher input expenses
The sequential pace is not as fast as very same time last year, which is why in YoY terms we see inflation slowing
However, cost pass-through might get speed in the coming months as the economy opens up much more on the back of vaccinations
Product price decreases or tax cuts are the only elements that can balance out such a result
The focus is now on how well the supply side normalises
Rupa Rege Nitsure, Group Chief Financial Expert, L-& t Financial Holdings, Mumbai: As expected, the heading CPI inflation has actually
relieved to 5.6 per cent in July from 6.3 percent in the previous 2 months due to a favourable base effect and a consecutive relieving in
food along with core inflation
This to an excellent extent reflects a downturn in demand due to the COVID-19's second wave
A negative y-o-y development in consumer non-durable goods in spite of the favourable statistical base vindicates the claim of need
destruction by the 2nd wave, especially in the rural belts
Today's data points vindicate the RBI's choice to calibrate the policy normalisation in a steady style
Upasna Bhardwaj, Elder Financial Expert, Kotak Mahindra Bank, Mumbai: While the prints are expected to stay primarily below 6 per cent till
December, inflation might overshoot again in 4QFY22
With inflation expectations having risen gradually, we anticipate the MPC to tread more meticulously from the October policy
The dilemma will likely increase amidst enhancing development prospects as vaccination picks up rate
While we do not anticipate any aggressive policy normalisation provided the uncertainty associated with more COVID-19 cases, the RBI's room
to disregard the inflationary dangers is increasingly narrowing
Following up on the recently announced liquidity normalisation steps, we expect additional tools (such as greater quantum of
14-day/7-day/overnight VRRR in 3QFY22, MSS, etc.) to shift the overnight rate within the policy passage prior to a reverse repo rate trek in
Radhika Rao, Economic Expert, DBS Bank, Singapore: July inflation reduced to 5.6 percent y/y, matching our projection
Core inflation was also a little lower at 5.9 percent vs 6.1 percent in June
Apart from base effects, food inflation moderated on lower perishables and pulses, helped also by administrative changes i.e
Looking ahead, there are hidden pressure points to keep an eye on, as inflationary expectations firmed up in the most recent survey
As states ease limitations, there is likely to be a shift far from items to services-led inflation, with firmer need to likewise motivate
producers to increasingly pass greater input costs
Base impacts and seasonality are most likely to see inflation moderate over the next three-four months before firming up again in the March
Suvodeep Rakshit, Senior Citizen Financial Expert, Kotak Institutional Equities, Mumbai: CPI inflation at 5.6 per cent remains in line with
While a beneficial base impact played its part, the sequential momentum for food products was likewise lower than the past couple of months
Core inflation likewise dipped to 5.9 percent though the print is marginally greater than anticipated
Our company believe that inflation will continue to glide lower for most of the fiscal year
The July print will offer the RBI some comfort to maintain its accommodative stance to support development even as it continues to adjust
Garima Kapoor, Economist - Institutional Equities, Elara Capital, Mumbai: The normalisation of supply chains following gradual unlocking of
financial activities and elimination of import constraints for some food products such as pulses helped to restrict food rate rise in July
High base impact likewise supported across the board small amounts with CPI coming completely in line with our price quote
While today's print supplies some breather to policy makers with inflation falling back within the target band, the anticipated trajectory
of inflation is most likely to compel the RBI to normalise policy towards the end of FY22
We anticipate the reverse repo to be hiked in Q4FY22
