TIL Desk/Business/New Delhi/ The Reserve Bank is expected to pause rate cuts for the rest of 2017-18 as retail inflation is likely to tread higher towards 4.7 per cent by March, says a Kotak Institutional Equities report.
According to the report, both CPI and WPI inflation have bottomed out and retail inflation is inching towards 4.7 per cent and wholesale towards 3.6 per cent by March 2018.
It further noted that the impact of the 7th Pay Commission Housing Rent Allowance will further lend upside pressure to CPI inflation, a major factor for the RBI to decide its monetary policy stance.
“We expect CPI inflation to tread higher towards 4.7 per cent by March 2018 (4.3 per cent without HRA),” the report said.
Moreover, core CPI (excluding HRA) inflation is expected to remain tepid, averaging 4 per cent in this fiscal compared to 4.7 per cent in 2016-17 underscoring the weak underlying demand pressures.
