RBI may cut rate in December as inflation recedes, says BofAML report

New Delhi: The reserve bank should lower the key interest rate in December, while inflation and signal decline before the intense industrial season from October to March are intensifying, according to a report.

According to the world’s leading financial institutions, Merrill Lynch (BofAML), retail inflation will remain around 3.5% in September and 3.3% in October, giving RBI the space to lighten interest . Retail trade inflation in India peaked at 3.36% in August for the most expensive vegetables and fruits.

According to the report, the peak in tomato and onion prices is declining, which will dampen inflation in the future, as a 5% inflation change will affect the inflation rate measured by the ” CPI by 50 basis points. BofAML reported that tomato stocks declined 32% in September and 25% from October.

On the other hand, onion prices also corrected 4.4% in October to date with imports from Egypt, the report adds, adding that this has reduced the globally manageable aggressiveness to 1.4 % in September and 0.5% in October. “We have become more confident in our call for a 25 basis point reduction in the RBI rate on December 6 with the peaks in tomato and onion prices in decline,” BofAML said.

The decline in interest rates, he added, will indicate a decline in the bank’s interest rate before the intensification of the strong industrial season from October to March. The report indicates that reductions in interest rates on loans will stimulate demand, start dormant factories, exhaust capacity and stimulate investment.

The Reserve Bank of India, at its October 4 policy review meeting, maintained the benchmark interest rate unchanged for fear of rising inflation, while growth forecasts fell to 6 , 7% for the year. current tax system.

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