India's central bank is expected to hold steady as "super core" inflation stays weak at 2.2%, even as headline pressures mount from rising fuel costs and an uncertain monsoon.
Despite rising fuel prices and the threat of a below-normal monsoon, the Reserve Bank of India is unlikely to raise interest rates in the near term, according to Aurodeep Nandi, India Economist and Executive Director at Nomura. The recent hike in petrol and diesel prices — totalling around Rs 7.5 per litre — along with CNG price increases, are expected to add roughly 50 basis points to inflation. Yet Nandi argues that the data does not yet justify a tightening response.
