Several brokerage firms have released their views on inflation and its impact on interest rate policies, with differing perspectives on when rate cuts might begin.
- Bank of America (BofA): BofA points out that a spike in perishable food prices has driven up inflation, likely ruling out a rate cut by the Monetary Policy Committee (MPC) in December. Although headline inflation remains elevated, BofA considers core inflation manageable. They observe that the RBI will continue to evaluate the need for support, while the Index of Industrial Production (IIP) shows modest recovery.
- UBS: UBS highlights that October CPI inflation accelerated above 6% due to high food prices, but anticipates that food inflation may ease from November onward. UBS expects CPI inflation to average 20 basis points higher than the RBI’s estimate of 4.5% for FY25, making a December rate cut unlikely despite a slowdown in growth momentum. However, UBS maintains its view that there could be up to 75 basis points of monetary easing early next year.
- Nomura: Nomura believes inflation has peaked, as has growth, and has adjusted its expectation for the first rate cut to February 2025 from December 2024. They continue to expect cumulative rate cuts totaling 100 basis points in the upcoming cycle.
These views reflect caution among financial institutions, considering inflationary pressures and growth moderation, as they adjust rate cut expectations for the coming months.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Please consult a financial advisor before making any investment decisions.
