RBI likely to keep repo rate unchanged: ICRA

ICRA has come out with its comments on CPI inflation data. As per the research firm the RBI may leave the repo rate unchanged in the mid-quarter policy review in March 2012.

For the month of January 2012, the variation between the higher CPI inflation of 7.5% as compared with the WPI inflation of 6.6%, can be partly explained by the different composition of the two indices. In particular, the CPI associates a higher weight to food items, around 45.5%, whereas the WPI attaches a weight of 24.3%. While food inflation at a consumer level (ex beverages and tobacco products) stood at around 3.5% in January 2012, wholesale food inflation (primary + manufactured food items) was below 2% in the same month. The combined CPI data shows that inflation is uncomfortably high even as inflationary expectations remain elevated. Although the pace of GDP growth in Q3FY12 would be an important cue, we expect that the RBI may leave the repo rate unchanged in the mid-quarter policy review in March 2012. Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.