Central Banks
Brace for More Hikes as India Inflation Here to Stay, Says HSBC
- Bumper rural crop to stoke demand and pressure core inflation
- Food inflation will remain high if farm output gets disrupted
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A weak winter crop would potentially be bad news for India’s inflation. But a bumper crop won’t make it good news either. That’s the assessment of HSBC Holdings Plc, which is now penciling in further monetary tightening.
A good harvest will boost farmers’ income and stoke rural demand, pressuring core inflation, HSBC economists Pranjul Bhandari and Aayushi Chaudhary wrote in a note Friday. “And, if the winter crop is weak due to last-minute weather disruptions, food inflation could remain high, even if rural incomes and core inflation fall.”