Elara: India's inflation rate is below expectations, and the central bank may keep policy unchanged in the first half of the fiscal year

(1) Elara Securities economist Garima Kapoor stated that after India's CPI rose by 3.9% year-on-year in May, the central bank may be in a relatively comfortable policy position, thus avoiding raising policy rates in the first half of the fiscal year ending in September. (2) The May data and June CPI estimates indicate that the inflation rate in the first fiscal quarter may be lower than the central bank's forecast of 4.2%; despite volatility in the Middle East, crude oil prices may fall, further easing inflationary pressures. (3) The Reserve Bank of India may still need to strike a balance between slowing economic growth and rising inflationary pressure. Elara expects that starting in October, there will be two rate hikes, totaling 50 basis points.