Professional forecaster survey pegs December inflation at 5.4%

Inflation will be better than RBI's own expectations by the end of December, says a survey of professional forecasters carried out by the central bank.
Headline inflation will be at 5.4 per cent by the end of December, as against 6 per cent target set by the Reserve Bank for January 2016, said the median estimate of a survey carried out last month, which was released by the RBI during its third bi-monthly policy today.
The central bank has been saying that it would meet its January 2016 target and Deputy RBI Governor Urijit Patel reiterated the same today saying the headline number would go below the targeted level.

However, in its policy statement, the RBI lowered its January-March inflation expectations by 0.2 per cent to 5.8 per cent.
As for the core consumer price inflation (excluding food and fuel), the median among the forecasters is at 5.3 per cent for December, which RBI expects to go up to 5.6 per cent.
The inflation trajectory is the most important data which determine the policy stance of the Reserve Bank, especially after the central bank adopts the formal inflation targeting as its core objective.

On GDP growth, the median expect among the forecasters comes in at 7.6 per cent for the year 2016, which is the same as RBI's own expectations but lower than those by the government which keeps mentioning that GDP expansion will come over 7.8 per cent.

Even though brokerages and lenders are expecting rate cuts of up to 0.50 per cent in the year, the professional forecasters expect cuts of only 0.25 per cent more in the current fiscal, with the median for the repo rate to be at seven per cent in March 2016.
Survey of Professional forecasters expect the government to meet its fiscal deficit target of 3.9 per cent for the fiscal, and expecting a current account deficit to be at 1.2 per cent for the fiscal.