Experts expect some inflation, CAD relief after US Fed hikes rates

MPC will be guided more by domestic inflation-growth dynamics than US central bank measures, they say

India may get some relief on the retail price inflation and current account deficit (CAD) fronts in the current financial year following the US Federal Reserve’s move to hike its key benchmark interest rate by 75 basis points (bps).

“If aggressive US Fed tightening brings down commodity prices, it may transmit to lowering domestic inflation within the MPC’s (monetary policy committee’s) comfort zone,” ICRA Chief Economist Aditi Nayar said.

Retail inflation remained above the Reserve Bank of India’s target of 4 per cent, plus or minus 2 per cent, for the sixth consecutive month in June, though it moderated to