Stanchart halves RBI rate cut forecast on hike in crude, duty

Mumbai: Standard Chartered said it expects the Reserve Bank of India to cut interest rates by 75 basis points in fiscal 2012/13, lower than its prior forecast of 150 basis points, citing higher crude oil prices and an excise duty hike.

[caption id=“attachment_250051” align=“alignleft” width=“380” caption=“The wholesale price index is India’s main gauge of inflation.”] [/caption]

“We expect WPI inflation to average 7.5 percent in the second half of 2012/13, much higher than 6.9 percent in the first half of the fiscal,” it said in a note on Tuesday. The wholesale price index is India’s main gauge of inflation.

“This should cause the central bank to pause its easing cycle from September 2012 onwards as inflation moves above its comfort zone again,” the note said. The RBI’s key repo rate stands at 8.50 percent at present.

Reuters