New Delhi: For the Reserve Bank of India, the ongoing slowdown in inflation momentum has given room to adopt a more accommodative monetary policy and cut policy rates by 50 basis points in the first half of this year, experts believe.
As per global brokerage firms like, Bank of America Merrill Lynch, Barclays, Citigroup and HSBC, inflation is likely to stay “benign” through the year 2015.
They said even though monsoon is likely to be a risk factor, inflation is likely to stay “softer” on account of lower commodity prices. Wholesale inflation turned negative for the second time in three months as fall in petroleum and food prices dragged it to a five-and-a-half year low of (-) 0.39 percent in January.
Barclays said in a research note, “With inflation declining consistently and given the slack in the economy according to the RBI’s industrial survey, we continue to see room for the RBI to lower policy rates in the first half of 2015. We maintain our forecast of another 50 basis points of repo rate cuts in the first half of 2015.”
