Business · India Bureau
RBI to raise repo rate to 5.75% by year-end, predicts Nomura
Nomura expects the Reserve Bank of India to implement a 50 basis point rate increase, bringing the terminal repo rate to 5.75% by December. The projection comes as underlying inflation pressures show signs of moderation across the economy.
LSN India ·
Global investment bank Nomura has forecast that the Reserve Bank of India will raise its key repo rate by 50 basis points cumulatively over the remaining months of 2024, bringing the terminal rate to 5.75% from current levels.
The projection reflects Nomura's assessment that while inflation remains a concern, headline price growth has moderated compared to earlier readings. The bank's analysis of inflation generalisation indices suggests that inflationary pressures have not broadened significantly across different segments of the economy, providing the RBI with some flexibility in its monetary policy stance.
According to Nomura's analysis, India's trend inflation trajectory has shown improvement, indicating that price momentum may be gradually easing. This suggests the central bank may continue calibrating its approach to balance growth support with price stability objectives.
The forecast aligns with market expectations of gradual rate adjustments as the RBI navigates the complex interplay between domestic inflation concerns and global economic headwinds. Market participants will closely monitor upcoming RBI monetary policy meetings for signals on the pace and extent of future rate movements.