Morgan Stanley sees RBI holding rates on April 1, CPI rising

MUMBAI: Foreign brokerage Morgan Stanley today said it expects retail inflation to rise to 8.5 per cent in near term and cool off to 6.5 per cent by December.
Given this outlook on the consumer price inflation (CPI), the brokerage expects the central bank to hold its key rates on April 1.
“In the context of CPI inflation remaining above 8 per cent in near-term, we expect RBI to keep policy rates on hold at the next monetary policy meeting (on Apr 1),” it said. Morgan Stanley said volatility in food prices and a base effect will result in the CPI inflation, which cooled down to 8.1 per cent for February, to go up to 8.5 per cent in the near-term.
It will, however, drop to 7.3 per cent by September as the effects of the monetary tightening, corporate sector’s focus on improving productivity, demand compression due to slower growth and lower commodity prices set in.
The number will come down further to 6.5 per cent by December on the base effect, it said further.
“We see risks emerging to the food inflation outlook due to the recent weather-related concerns prompted by unseasonal rain and hailstorms in some parts of the country.” —PTI