New Delhi : The Reserve Bank is expected to keep policy rates on hold this year but there are risks tilted towards a hike in 2018, a Goldman Sachs report says.
According to the global financial services major, inflation is likely to remain within the RBI’s target range of 2-6 per cent, but India is still some time away from bringing inflation to its 4 per cent target sustainably.
“We expect headline inflation to pick up in the next few months as the effects of demonetisation on food prices fade and oil prices trend higher,” Goldman Sachs said in a research note.
The report noted that headline inflation is likely to stabilise around the 5 per cent mark from July-September 2017 onwards, with lower household expectations offsetting upward pressures from the civil service housing rent allowance increase. Key risk for price rise is the ‘deficient’ monsoon, that could lead to a pick-up in inflation expectations.
