If RBI eases rates too much, inflation could flare up: experts

Inflation accelerates to 7.23%

The government has released the inflation data for the month of April which is at 7.23%. Following are some of the experts commenting on the data.

Jonathan Cavenagh, FX Strategist, Westpac, Singapore

"Not a good data print for India at all, particularly coupled with last week's very weak IIP (index of industrial production) print. Still elevated inflation pressures, combined with softening real activity will re-ignite stagflation fears. RBI will have a battle on its hands to keep a lid on USD/INR."

Leif Eskesen, Chief economist for India and Asean, HSBC, Singapore

"Today's number underscores the point that the Reserve Bank of India has limited room to cut monetary policy rates because it highlights the risks that inflation poses.

 

"The inflation is more structural in nature, and if the RBI eases rates too much, inflation could flare up."

A Prasanna, Economist, ICICI Securities, Primary dealership, Mumbai

"Though the number is higher than expected, one saving grace is most of the sharp rise is limited to primary articles and not core inflation. We are not yet revising our inflation view of 7% March-end (2013) since it is mostly on the primary side, we don't think this will be a permanent impact."

Rajeev Malik, economist, CLSA, Singapore

"The data should result in soul-searching at the Reserve Bank of India for having delivered the unnecessarily bigger-than-expected rate cut last month."