A report has said that inflation is peaking off and the Reserve Bank of India is expected to cut rates by 25 bps in August if monsoon is normal.
As per reports, January inflation stood at 5.1 per cent, just below December's 5.2 per cent, and BofAML is tracking February inflation at 4.7 per cent with tomato/onion prices slipping.
Commenting on the issue, a BofAML Official told the media, "We expect the RBI MPC to look through the jump in inflation to 5.4 per cent in April-June, as it is driven by base effects. Against this backdrop, we expect the RBI MPC to cut rates by a final 25 bps in August if the La Nina materialises."
“While Budget 2018 has hiked minimum support prices, the inflationary impact is likely to be muted as ruling wholesale prices are already higher than the revised MSP,” he added.