The Hindu Business Line : Inflation no cause for worry any more, say economists

Thiruvananthapuram, Dec. 6 Leading economists are of the view that inflationary expectations have ‘moderated considerably’ to a point where headline figures ‘have ceased to become a cause of worry’ for policymakers.

Speaking to Business Line, Mr Abheek Barua, Chief Economist, HDFC Bank, said that consensus market view was that inflation would come down to three per cent or even below by March 2009.

On Expected lines

This is a significant improvement on stated Reserve Bank target of seven per cent or below. The rate cuts announced on Saturday have been largely along expected lines, although there is denying that some sections of the market did expect still larger cuts.

According to Mr Barua, no major movements were discernible in bond yields. But a spate of borrowings already announced and the fact that credit may be slackening should progressively help bring the 10-year-yield to around 6.25 per cent.

Headline inflation

Inflation is not a cause for worry any more, says Dr D. K. Joshi, Director and Principal Economist, Crisil. Replying to a question, he said that he expected headline inflation figure to wind down to below five per cent by March.

Dr Joshi said he did not want to speculate on a specific figure since the Reserve Bank too has chosen not to project any by itself. But he was sure that the southward-bound crude and commodity price ‘combo’ would make it easily predictable for anyone to divine where inflation and inflationary expectations are headed.

The RBI was only doing the right thing by waving down reverse repo rates, which, according to Dr Joshi, have been hardly serving any other purpose than incentivising banks’ stashing away painstakingly built liquidity reserves to be parked with the RBI or staying merrily invested in G-Secs.

More Stories on : Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Dumping duty on Chinese sulphur

Inflation no cause for worry any more, say economists

OECD indicators signal deepening global slowdown

RBI signals cheaper loans

‘Hotels need to work on guest-friendly security measures’

Luxury hotels to cut room tariffs by 10-20%

Truck rentals may dip to 5% on diesel price cut

Cotton fabric output drops to 4-1/2 year low

Micro and small enterprises get a lifeline

Relief to both developers and home buyers

SEZs await apex bank decision on ‘infrastructure’ status

Priority status to boost housing demand

IRDA seeks investment details from insurers

Weekly News Round-up

‘Monitor steel imports to safeguard domestic industry’