RBI policy stance change to be premature in February – Deutsche Bank

Kaushik Das, Deutsche Bank India Chief Economist, said in his latest client note on Monday, any change in stance by the Reserve Bank of India (RBI) in February would be seen as premature, with price pressure likely to ease ahead.

Key Quotes:

“The MPC should wait for more evidence related to the evolving food price trend before making any change to the current monetary policy stance.

It could well be that the MPC decides to change the stance to neutral on 6th Feb, only to be followed by sharp disinflation in vegetable and overall food prices from that month onward.

India's retail inflation jumped to 7.35% on year in December, highest in over five years, leading to speculation of prolonged pause from MPC and change in policy stance to neutral from accommodative. April policy would be ideal to consider need to change stance.”

• USD/INR: Mildly positive near 71.00 with eyes on macros