MPC May Hold Interest Rates Steady In December 2020

Following release of WPI data, noted rating agency ICRA has said that the Monetary Policy Committee might hold interest rates steady in its forthcoming monetary policy meet of December 2020.

"WPI data did not reveal any information that would build the case for a rate cut in December 2020. In our view, the MPC is likely to stay on hold in at least December 2020, if not in February 2021 as well.

in our view the core inflation will continue to record a steady uptick in MoM terms over the next few months, with the strengthening of the economic recovery. Overall, the WPI inflation is expected to remain stable in the next print, before recording base effect related volatility over the rest of this fiscal, " ICRA has said.

According To ICRA wholesale prices of various items have recorded a varied trend in the initial part of November 2020, with stabilisation displayed by cereals, even as some pulses and oilseeds have displayed a rise.

"In the case of vegetables, the average prices of onions and potatoes have continued to surge in November 2020, whereas those of tomatoes have receded further. Overall, the anticipated healthy kharif arrivals in the market coupled with a favourable base effect are expected to soften the wholesale food inflation in the ongoing month, in our assessment," the rating agency has said.