 "Expert views: Jan inflation eases to 6.62%")
Here is what the experts have to say:
Leif Eskesen, Chief economist for Indian and Asean, HSBC, Singapore
"It is clearly much lower than anticipated. Things are moving in the right direction, it is positive and encouraging for the Reserve Bank of India. However, other factors will have to fall into place before the RBI eases again, and that includes continuation of structural reforms and what the budget brings. The RBI will also keep a close watch on the consumer price inflation and the fiscal deficit."
Abheek Barua, Chief economist, HDFC Bank, New Delhi
"We seem to be looking at continued deceleration in manufacturing product inflation. I am not sure where the relief on fuel has come from, one has to look at the fine print. However, with both the headline inflation and manufacturing coming down, we are looking at a sharp and sustained downward trend, which should give the RBI the elbow room to go ahead at least with a couple of more rate cuts in the first half itself perhaps in March and April. I am surprised at the fuel index, I thought it would be much higher."
Rupa Rege Nitsure, Chief economist, Bank of Baroda, Mumbai
"Acute slowdown in demand is obvious from the manufacturing products inflation at 4.8% and its core component at 4.1%. Today's inflation reading combined with further contraction in industrial production in December fortifies my view that RBI will have to reduce rates in the March policy by at least 25 bps."
Sujan Hajra, Chief economist, Anand Rathi, Mumbai
"The Reserve Bank of India is unlikely to cut rates in the mid-quarter policy in March 19. The central bank will be jittery over the high food prices, and the consumer price inflation. They will wait for sometime before doing another rate cut. They will also take into account the fiscal situation. We expect another rate cut in the annual policy."
Siddharta Sanyal, India economist, Barclays Capital, Mumbai
"Given that the downside surprise is much lower for core inflation than headline inflation, it looks like the fuel group price increase has not been factored into the headline number and will be added in the numbers going ahead. The RBI is aware of easing inflation but they are worried about current account deficit. I think the GDP print will be more important. We still maintain a 75 bps rate cut view over a period of time going ahead."
Anubhuti Sahay, economist, Standard Chartered Bank, Mumbai
"The number is lower than expected and manufacturing inflation has surprised on the downside. It is interesting to note that something in commodities like sugar has pushed manufacturing product inflation lower. And core has marginally corrected further to 4.1% from 4.2%. With this inflation print, we are still maintaining 25 basis points call of a rate cut from RBI on March 19. There is at least a positive on WPI although retail CPI is still elevated."
Anjali Verma, economist, Philipscapital, Mumbai
"It should bode well for RBI. Our expectation is that inflation will ease more to 5.5-5.8% by fiscal year end. However, the RBI is also now worried about other variables like current account and fiscal deficits in policy making.My call is a rate cut will be likely in March or April by another 25 basis points."
Upasna Bhardwaj, economist, ING Vysya Bank, Mumbai
"The inflation number for January is a pleasant figure. The moderating core inflation despite hike in the diesel prices for bulk consumers in the middle of the month would create room for RBI to cautiously cut the repo rate by 25 bps in the March policy."
Shakti Satapathy, fixed income analyst, AK Capital, Mumbai
"The print is more in line with our expectation and a result of lower readings in crude and manufacturing indices. Today's number might give a short-term respite for the forthcoming repo cut in the March RBI policy. However, the central bank would adopt a cautious approach resulting from consistent worries over imported inflation and higher current account deficit. We expect the bonds to trade rangebound with a downward bias in yields until March primarily in anticipation of a rate cut and timely OMOs (open market operations)."
A Prasanna, Economist, ICICI Securities Primary Securities Dealership, Mumbai
"This shows that finally inflation is easing and fits with the growth slowdown. I think March inflation will be lower than RBI's projection and that should give RBI the comfort to cut rates by 25 basis points in March. Also, the revision trends are softening and so there could be a marginal upward revision if at all, to the January number. This number will strengthen the rate cut expectations going ahead."