Like many experts, ratings agency ICRA also expects RBI to stick to a firm anti-inflationary stance over the remainder of FY15 with no likelihood of a repo rate cut by March end, 2015.

“CPI inflation in January 2015 to be well below the target of 8.0% as per the glide path announced by the Central Bank, despite the waning of the favourable base effect post November 2014. Nevertheless, ICRA expects the RBI to stick to a firm anti-inflationary stance over the remainder of FY15, to rein in expectations and impart credibility to its inflation targets,” ICRA said in a statement.

“ICRA’s baseline expectation factors in the commencement of a rate easing cycle in Q1FY16, with Repo rate cuts of upto 50 bps,” it added.

ICRA has revised its forecast for credit growth during FY15 to 13.5-14.5% from the previous estimate of 14.0-15.0%, while maintaining its estimate for deposit growth at 12.75-13.50%.

The pace of growth of systemic deposits rose to 13.1% y-o-y as on October 3, 2014 from 12.4% y-o-y as on June 27, 2014, while that of non-food credit offtake slowed to 11.2% from 13.5%, respectively.

“Credit growth is expected to recover moderately by Q4FY15 as large ticket corporate loans pick up with an improvement in economic growth conditions. However, following the decline in commodity prices, the working capital requirements of firms in various sectors would be lower. In particular, the deregulation of diesel prices would lead to lower under-recoveries for OMCs, reducing their working capital needs. Based on such factors, ICRA has revised its forecast for credit growth during FY15 to 13.5-14.5%,” ICRA added.

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