ICRA expect another rate hike of ~10-35 bps in the September 2022 Policy meeting, albeit lower than the newly coined ‘new normal’ of 50 basis points.

The agency also expect a lower (albeit double-digit) print for Q1 FY2023, on account of the elevated commodity prices and the dip in rabi wheat output in that quarter,

Rating agency ICRA stated that Rate hikes will continue till inflation recedes below 6% and expect this to avert the need for rate hikes beyond the September 2022 Policy meeting.

ICRA expect another rate hike of ~10-35 bps in the September 2022 Policy meeting, albeit lower than the newly coined ‘new normal’ of 50 bps, given the MPC’s focus on anchoring inflation expectations and the RBI Governor’s statement on ensuring that inflation moving closer to the target of 4.0% over the medium term.

The agency also expect a lower (albeit double-digit) print for Q1 FY2023, on account of the elevated commodity prices and the dip in rabi wheat output in that quarter, counterbalanced by a better growth turnout in Q2-Q4 FY2023 than the MPC’s estimates.

The moderation in global commodity prices since mid-June 2022 will reduce the pressure on business margins and boost value-added growth in Q2 FY2023, the agency said.