BS EDIT: Inflation surge complicates RBI's rate cut dilemma

By Business StandardPublished On Nov 14, 2024

Inflation hits 14-month high

Oct’s CPI-based inflation rose to 6.2%, the highest in 14 months. The spike has led economists to rethink expectations of a policy rate cut in Dec

RBI’s stance on inflation

RBI Governor Das warned of inflation rising due to base effects; October's figure aligns with projections, signalling ongoing inflationary pressures

Food inflation driving rise

October’s inflation spike, driven by food prices, saw food inflation exceed 10 per cent. RBI must focus on headline inflation despite the core vs food debate

Rate cuts unlikely

RBI will wait for inflation to align with its 4 per cent target, making policy rate cuts unlikely without clear signs of moderation

Slowdown adds to woes

GDP growth slowed to 6.7 per cent in Q1, hit by low government spending. Declining corporate profits point to a broader demand slowdown

Broader implications for RBI’s policy

Rising inflation and economic slowdown complicate RBI’s choices, hinting at the need for measures beyond rate cuts if growth remains weak