Appropriate for RBI to wait, act with restraint
Shubhada Rao: Dec 19 2012, 01:28 IST
While growth in Q3 is expected to remain sideways, it is likely to clock above 6% in Q4. For FY13, we continue to retain our GDP growth forecast at 5.7%, and expect it to improve to around 6.5% in FY14.
The moderation in inflation accompanied with the supply side measures initiated by the government, are likely to serve as ‘growth enabling conditions’ paving way for further monetary policy support to growth. As such, RBI is expected to begin easing as early as January 2013 and cumulatively cut repo rate by 50 bps until March 2013 and by an additional 50-75 bps through FY14.
The writer is chief economist, Yes Bank
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