Only WPI above 8% would delay rate cut: DBS

Mumbai: DBS says a 25 basis points cut in India’s repo rate is “all but certain”, while the chances of a 50 bps cut would increase if WPI inflation comes in below expectations.

“Inflation will have to overshoot considerably (such as above 8%) to cause any rethink,” DBS said referring to the case for a 25 bps rate cut.

DBS expects WPI to be 7.4%, while sees core inflation at 5%.

However, aggressive rate cuts to spur growth could backfire, as they may raise inflation beyond comfort levels and increase depreciation pressures on the rupee, they write.