Dec inflation: Some analysts see rate cut from Feb, others yet another pause
New Indian ExpressWatchers of the Reserve Bank are divided over the impact of falling inflation on the potential for a rate cut next month. Two of them forecast another pause in policy rate cuts, arguing that prices remain stubbornly above the central bank’s comfort level, with inflation at 5.2 percent in December. While Aditi Nayar, the chief economist at Icra Ratings, and an economist at rival agency India Ratings said they don’t see any interest rate action in the next policy review in February, Crisil Ratings and Care Ratings see the second successive fall in consumer prices enabling the RBI-led rating setting panel to go for a first rate cut in two years. Paras Jasrai, a senior analyst at India Ratings, also said, “odds are now tilted in favour of a pause in policy rates yet another time amidst positive inflation data in December. Similarly, top rating agency Crisil “A policy rate cut is around the corner and the central bank's easing cycle is expected to begin in February,” Dharmakirti Joshi, the chief economist at Crisil, said, saying the biggest pain points for the economy is not inflation now but liquidity deficit, higher money market rates and weaker rupee apart from the hardening global environment.