Moody's Investors Service has said the recent uptick in food inflation and uncertain El Niño-related weather conditions would delay the RBI's consideration of easing monetary policy until early next year.
The rating agency said the domestic demand in India remained buoyant and as long as core inflation remained relatively stable, rate hikes by the were also unlikely, according to a note on Thursday.
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The Reserve Bank of India's monetary policy committee has decided to keep the benchmark repo rate unchanged for the third straight meet in August.
"India's monsoon season, which runs from June to October, could also see below-average rainfall, resulting in higher food prices," it said. As of Aug. 29, the India Meteorological Department has estimated a 9% rain deficiency across the country.
"If El Niño this year proves to be particularly strong in the second half of 2023 and early 2024, agricultural commodity prices could shoot up", it said.
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