The Reserve Bank of India is expected to keep the key policy rates unchanged at its ensuing policy review meet next month, amid easing global crude oil prices and robust agriculture production, says a report.
According to Dun & Bradstreet Economy forecast, the robust agriculture production and softening of vegetables and fruits prices will also help in keeping the food inflation under check.
The report further said that the government’s new procurement policy will support prices of agricultural produce going ahead.
D&B expects the CPI inflation to be in the range of 2.8-3 per cent and WPI inflation to be in the range of 4.8-5 per cent during November this year.
“The risks emanating from global crude oil prices have eased to an extent as oil prices are likely to fall or remain subdued in the near term. This has partially dispelled concerns over one of the primary factors affecting India’s current account deficit, fiscal slippage, and inflationary dynamics,” Dun & Bradstreet India Lead Economist Arun Singh said.
Singh further said the return of foreign investors in Indian markets, stability in the rupee, strengthening of industrial production and benign inflation have provided much-required support to expectations of economic growth revival.
However, bad assets in the banking system continue to increase and concerns over probable tightening of regulations in the non-banking segment will also lead to some disruption in the overall financial system in the near-term till clarity emerges, he noted.
“It would be interesting to know the decision taken by the RBI in its upcoming monetary policy review. Our assessment is that RBI will maintain a status quo in the policy rate,” Singh added.