Inflation is expected to climb down to 4.5-4.75 per cent by March 2017 and the Reserve Bank of India (RBI) is likely to go for a 0.5-percentage-point cut in this financial year, says a Morgan Stanley report.
"With our forecast of consumer price index inflation at 4.5-4.75 per cent for quarter ended March 2017 (lower than RBI's expectation of five per cent) and RBI's lower real rate target of 1.25 per cent, we expect 25-50 bps of rate cuts by March 2017," Morgan Stanley said. Easing food prices is the key factor driving moderation in inflation.