Mumbai: Inflation is likely to peak at 8.7
per cent by the end of March and the Reserve Bank is expected
to begin tightening its monetary policy from the January 29
review itself, says the Bank of America Merrill Lynch (BofAML).
BofAML also pegs the country's GDP growth at 8 per cent,
assuming a normal monsoon.
"The first-half this year will see inflation going up
to 8.7 per cent level. High inflation at a time of easy
liquidity could lead the RBI to hike cash reserve ratio (CRR)
by January itself against the backdrop of rising inflation and
receding growth risks," BofAML Managing Director Jyotivardan
Jaipuria told reporters here today.
"But normal rains -- that are expected -- will douse
inflation by the middle of the year at around 5 per cent," he
said.
A BofAML report says industrial growth is expected to go
up in the second half of the year to 10 per cent from 6.5 per
cent in the first half of FY 10 on the back of the base effect
of last year's meltdown and the recovery in machinery
production seen since June 2009.
Just as inflation cools off, year-on-year industrial
growth will hit a soft patch in June-September 2010, it says.
-PTI
First Published: Wednesday, January 27, 2010, 21:11