Bangalore: Of India inflation At least the remainder of 2022 will remain above the top of the central bank’s tolerance band, which is longer than before, with several more interest rate hikes inevitable in the coming months, but a Reuters poll has shown.
One of the later entrants in the current round of global monetary policy, the Reserve Bank of India raised its repo rate by a total of 90 basis points in May and June, but the inflation outlook has turned worse since the April poll .
The rise in global commodity prices has kept inflation above the RBI’s upper tolerance limit of 6% for the entire year.
So far, New Delhi’s fiscal response to the rising cost of living in the country of 1.4 billion has been modest.
Inflation was set to measure 7.3% and 6.4% in Q3 and Q4 2022, respectively, according to a July 4-11 Reuters poll forecast. In the last election, inflation was set to return to the RBI’s tolerance band by the end of the year.
“In India, inflation will prove to be much more stubborn than in other parts of the region. Things will get better, but they will improve much faster in other parts of Asia,” said Miguel Chanco, chief emerging Asia economist at Pantheon. Macroeconomics.
According to a survey of 42 economists, average inflation in this fiscal year stood at 6.8%, a sharp upgrade from 5.5% in April’s poll, to 5.2% and 4.7%, respectively, over the next two years.
The RBI is expected to further increase the repo rate, which currently stands at 4.90%, by another three-quarters percentage point to 5.65% by end-year. This is slightly higher than a separate survey taken in June, which till then had put rates at 5.50%.
In the latest survey, more than half of economists, 25 out of 48, have forecast rates to rise to 5.50% or more by the end of the quarter.
Of those who provided forecasts for the August meeting, more than a quarter, 10 out of 35, had expected the RBI to increase by 35 basis points to 5.25% at its meeting next month, while 14 were expected to rise to 5.25% at its meeting next month. Small quarter-point growth is expected. Nine said the RBI would increase by 50 basis points, one said 40 and one said 30.
While India is one of the fastest growing major economies, growth is projected to average 7.2% this fiscal, slightly lower than the 7.5% pace projected in a previous Reuters poll, and in line with the RBI’s projection of 7.2% .
Societe Generale economist Kunal Kundu said, “India will still remain one of the fastest growing economies…
less laudable challenge to ” Indian Economy The fact is that domestic demand is weak… just because jobs are not being created as they should be.”
When asked how the employment situation has changed in the last one month, 15 out of 27 said it has improved slightly, the remaining 12, over 40%, said it has worsened slightly.
Even then, cost of life crisis Not expected to decrease significantly until at least next year. Of the 26 economists who answered an additional question, 20 said it would take at least six months or more. The remaining six said within six months.
a weak Rupee has escalated the matter further. The currency, already down more than 6% for the year due to high oil prices – India’s biggest import – was expected to set a new record low of 80 for the dollar by September, a separate Reuters survey found. .
One of the later entrants in the current round of global monetary policy, the Reserve Bank of India raised its repo rate by a total of 90 basis points in May and June, but the inflation outlook has turned worse since the April poll .
The rise in global commodity prices has kept inflation above the RBI’s upper tolerance limit of 6% for the entire year.
So far, New Delhi’s fiscal response to the rising cost of living in the country of 1.4 billion has been modest.
Inflation was set to measure 7.3% and 6.4% in Q3 and Q4 2022, respectively, according to a July 4-11 Reuters poll forecast. In the last election, inflation was set to return to the RBI’s tolerance band by the end of the year.
“In India, inflation will prove to be much more stubborn than in other parts of the region. Things will get better, but they will improve much faster in other parts of Asia,” said Miguel Chanco, chief emerging Asia economist at Pantheon. Macroeconomics.
According to a survey of 42 economists, average inflation in this fiscal year stood at 6.8%, a sharp upgrade from 5.5% in April’s poll, to 5.2% and 4.7%, respectively, over the next two years.
The RBI is expected to further increase the repo rate, which currently stands at 4.90%, by another three-quarters percentage point to 5.65% by end-year. This is slightly higher than a separate survey taken in June, which till then had put rates at 5.50%.
In the latest survey, more than half of economists, 25 out of 48, have forecast rates to rise to 5.50% or more by the end of the quarter.
Of those who provided forecasts for the August meeting, more than a quarter, 10 out of 35, had expected the RBI to increase by 35 basis points to 5.25% at its meeting next month, while 14 were expected to rise to 5.25% at its meeting next month. Small quarter-point growth is expected. Nine said the RBI would increase by 50 basis points, one said 40 and one said 30.
While India is one of the fastest growing major economies, growth is projected to average 7.2% this fiscal, slightly lower than the 7.5% pace projected in a previous Reuters poll, and in line with the RBI’s projection of 7.2% .
Societe Generale economist Kunal Kundu said, “India will still remain one of the fastest growing economies…
less laudable challenge to ” Indian Economy The fact is that domestic demand is weak… just because jobs are not being created as they should be.”
When asked how the employment situation has changed in the last one month, 15 out of 27 said it has improved slightly, the remaining 12, over 40%, said it has worsened slightly.
Even then, cost of life crisis Not expected to decrease significantly until at least next year. Of the 26 economists who answered an additional question, 20 said it would take at least six months or more. The remaining six said within six months.
a weak Rupee has escalated the matter further. The currency, already down more than 6% for the year due to high oil prices – India’s biggest import – was expected to set a new record low of 80 for the dollar by September, a separate Reuters survey found. .