Morgan Stanley: Inflation to come down below 5 percent in the next 2 years
Posted on: 15/Aug/2016 5:17:37 PM
The international Financial Consultancy firm, Morgan Stanley has reported that there would be sustained economic growth in India for a longer period because of the factors such as an increase in product manufacture, an increase in the public buying capacity, and relaxation of finance policies. Inflation will be below 5 percent in the next 2 years.
As per the report, domestic demand will increase the national economy. Factors like in increase in local consumers and foreign investments will play a critical role in the growth of Indian economy.
The macroeconomic environment has been conducive to growth in the last 2 years. However, the actual growth in the economy will be less that what is expected.
Morgan Stanley expects that inflation associated with the consumer price index will be on a low key. The inflation will touch 4.5 percent by March next year. Most of the factors causing inflation will be checked and under control. This will help attain the inflation target.
Morgan Stanley estimates that the inflation in the first quarter the year 2017 (January-March) will be less than 4.5 percent. Food inflation and the environment affecting inflation are the factors which enable these favorable conditions.
The company expects that interest rate ratio may be reduced by 0.5 percent during this financial year. Morgan Stanley mentions the notification in the October Financial Policy Review meeting conducted by the Reserve Bank of India that there may be a possible reduction in the interest rates.
However, the governor of the Reserve Bank of India, Mr. Raghuram Rajan, in his last Financial Policy Review Meeting, has announced that there is likely to be no change in the interest rates as there are prospects of an increase in inflation.
