The Indian economy is seen recovering faster than expected and the Reserve Bank (RBI) is likely to have come to an end of the rate easing cycle, PTI reports quoting the global forecasting firm Oxford Economics. The firm further said that inflation is expected to average significantly above 6% in the fourth quarter of the current fiscal and the RBI may hold policy rates in December monetary policy review meeting.
“Consumer inflation rose back to pre-virus highs in October, with almost every broad category other than fuel experiencing a rise in prices. While Q4 is likely to mark the peak for inflation, we have turned more cautious on the trajectory over 2021,” it said.
Costlier vegetables and eggs pushed up retail inflation to a nearly six-and-a-half-year high of 7.6% in October, keeping it significantly above the comfort zone of RBI. Retail inflation stood at 7.27% in September 2020.“At the same time, robust bottom-up activity data suggest that the economy may be recovering faster than we anticipated. As such, we see an increasing possibility that the RBI’s easing cycle has ended,” Oxford Economics said.