Economic Outlook - August 2023
Download ReportQuantEco Research || India Macrobook Aug-23
We maintain our call of moderation in GDP growth to 6.0% in FY24 from 7.2% led by global & domestic factors. We have upped our FY24 CPI inflation forecast of 5.5%, given the sharp spike in food inflation over Jun-Jul along with other risks stacked to the upside. We expect MPC to remain on an extended pause through FY24. An extended pause from the MPC could have a moderating influence on yields over a longer horizon. As such, we expect 10Y g-sec yield to move towards 7.0% by Mar-24. We expect Fed to lead the rate cutting cycle in 2024 – this is likely to weigh on the USD as clarity on the timing of Fed pivot emerges in the coming quarters. As such, we expect rupee to see backloaded appreciation (aided by a favorable BoP outlook), with USDINR likely to move towards 82 (from 80 earlier) levels by Mar-24.