Citi's India 2024 outlook forecasts lower inflation from RBI projections

Citi's economic outlook for India in 2024 reveals a nuanced perspective, with the full-year inflation forecast positioned approximately 20 to 30 basis points below that of the Reserve Bank of India (RBI).

In a CNBC-TV18 interview, Citi's Chief India Economist, Samiran Chakraborty spoke at length about the evolving inflation scenario and its potential impact on the RBI's policy decisions.

Chakraborty noted a potential shift in the RBI's stance towards neutrality around April. He suggested that as the RBI considers this shift, there might be room for a slight easing of yields, but he anticipates the first-rate cut not occurring before August.

The economist highlighted the importance of global factors, such as potential rate cuts by central banks like the Federal Reserve (Fed) and the European Central Bank (ECB), and the clarity on monsoon conditions, in influencing the RBI's decisions.

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He explained, "Our full-year inflation forecast is about 20–30 basis points lower than the RBI’s, partly due to our slightly lower growth forecast compared to the RBI’s. As we move into the second half of the year, tracking around 4–4.5% inflation, the real policy rate is likely to exceed 200 basis points, providing a window for the RBI to consider a tactical 50 basis point rate cut. It's not expected to be a significant pivot towards easing, but a strategic move in the latter part of the year."

For the entire interview, watch the accompanying video