RBI may cut Repo rate by 25 bps: ICRA

Expect the RBI may reduce the Repo rate by 25 basis points in the upcoming mid-quarter policy review to address the slowdown in growth: Aditi Nayar, Sr.Economist of ICRA

March 14, 2013 / 15:58 IST

By Aditi Nayar, Sr.Economist of ICRA

The pickup in headline WPI inflation is in line with our expectations, following a revision in the index levels for various fuels, including diesel, and LPG given the resetting of prices that took place in January-February 2013.

The moderation in core inflation to below 4% highlights the weakening pricing power of producers in light of the slackening economic growth momentum.

With the pickup in WPI inflation largely on account of suppressed inflation being recognised; core inflation moderating considerably; and fiscal compression being attempted by the Union Budget through a reduction in subsidies that would dampen inflationary pressures, we expect the RBI may reduce the Repo rate by 25 basis points in the upcoming mid-quarter policy review to address the slowdown in growth.

first published: Mar 14, 2013 03:58 pm

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