RBI likely to stand pat on rates till June: Kotak Mahindra

A: For the next two policies, maybe -- in the sense that we are looking at softer bias to the headline consumer price index (CPI) number. [There are] slightly worrying trends as of the last reading on the core CPI number but I don’t think they are likely to surprise even more on the higher side.

The key takeaway for me is that probably the currency market dynamics is something the RBI still doesn’t know of at this point in time. Associated with the domestic issues of the election pressures and how the overall QE taper pans out in the global market and the risk-on versus risk-off -- that is the unknown factor in terms of guiding the CPI at this point.

So, for me till about June I don’t think there is any momentum. However, beyond June, I would restrict my comment maybe to an equal probability of a hike versus a cut.

Q: Since you are not expecting rate hikes at least in the next two policies, what is your inflation trajectory going ahead both on CPI as well as on wholesale price index (WPI)?

A: We have still not done the clear number trajectory on the WPI. On the CPI, for us the next reading should be around 8.9 percent or so whereas as I said earlier we are not really expecting any significant momentum on the core CPI.

WPI anyway had come down to a 6-6.1 percent and given the fact that vegetable prices and fruit prices were relatively also softer in the month of January we can expect some softening on the WPI too. However, we still have to sort look at exactly where the numbers are.