Fed Will Drive RBI’s Rate Decisions, Says CLSA’s Indranil Sen Gupta


In the upcoming meet in December, the MPC is likely to raise the benchmark repo rate by 35 basis points, from 5.9% currently, he said.

While the latest consumer price inflation print of 6.77% for October was encouraging, the persistently high core inflation figure is likely to be a problem for the RBI to battle.

“We see inflation going down to 6.3% by March and 5.5% next year, which is back to the RBI’s target range of 2-6%…I think core inflation has to come off for us to declare the all-clear over inflation,” Sen Gupta said.

With uncertain macroeconomic conditions globally, India’s growth is likely to suffer in the coming quarters.

“Our CLSA activity index has come down to 6% handle from 13%, which is to be expected given that the base effects are fading,” he said. “We are looking at a growth of 6.8% for the full year, so obviously the next two or three quarters are going to be relatively weaker,” the economist said, adding that a recession in the US and Europe will likely lead to India’s gross domestic product growth easing to 5.2% in the next fiscal.


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