RBI rate cut in Feb may not be a done deal, say economists

Inflation hit 14-month high of 6.2% in October, breaching upper tolerance band

- SUBRATA PANDA & ANJALI KUMARI

Even as the high inflation figure for October has ruled out any possibility of a rate cut by the Reserve Bank of India's (RBI's) monetary policy committee (MPC) in December, a rate cut in February also looks uncertain due to global uncertainties. Economists told Business Standard that unless domestic growth slows markedly, the outlook on rate cuts remains unclear.

India's headline inflation touched a 14-month high of 6.2 percent in October, breaching the MPC's upper tolerance band of 6 percent. October's inflation figure was even higher than September's (5.49 percent), driven by a spike in food inflation, which stood at 10.87 percent while core inflation (excluding food and fuel) remained benign.

"While a rate cut in December is now off the table, a cut in February or April is more likely. The timing will depend on the impact of global developments, particularly regarding tariffs, on the rupee, domestic inflation, and bond yields," said Sakshi Gupta, principal economist at HDFC Bank.