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2025-09-12 22:44:38
[Capital Economics: India's inflation will continue to rise, but at a very slow pace] Capital Economics said that India's headline consumer price index (CPI) rose for the first time in 10 months in August, but it will take a long time to return to the Reserve Bank of India's 4% target. "This provides room for the Reserve Bank of India to restart the easing cycle and provide more policy support in the face of punitive US tariffs," wrote economist Shilan Shah. He expects inflation to continue to rise, but at a very slow pace. Favorable weather will help to curb food prices, and as the economy gradually cools after strong growth in the first half of the year, potential pressures should be contained. Given the 50% tariff on US exports, CE now believes that the Reserve Bank of India will further cut interest rates this year on top of the 100 basis points of cuts it has made so far. The agency expects another 50 basis points cut, bringing the repo rate to 5.00% by the end of 2025.
