Nomura Expects Reserve Bank of India to Keep Rates Unchanged for Rest of Year

Nomura economists said the Reserve Bank of India had not put interest-rate hikes on its agenda despite an increase in inflation in May. According to Jin10, the economists said the latest consumer price index (CPI) data served as a key test of inflation pressures, given that the Strait of Hormuz had been blocked for three months and the government had allowed gasoline and diesel prices to rise starting in mid-May. They said some price pressures were visible within the core inflation basket, but most subcomponents had not yet rebounded. The economists added that this pointed to weak consumer demand. Nomura expected the Reserve Bank of India to keep interest rates unchanged for the remainder of this year.