J.P. Morgan & DBS Looking For +25bps in April Post Yesterday's Inflation Data

J.P. Morgan notes... "January CPI printed in line with expectations at 6.4% oya (J.P. Morgan and consensus: 6.4%), above the RBI’s upper band of 6%, and close to last month’s reading of 6.5%. Sequentially, headline CPI rose another 0.5% m/m, sa in February on the back of a sharp 1.2% increase in January. This is, therefore, unlikely to assuage policymakers’ concerns of inflation getting entrenched and remaining elevated. Furthermore, the RBI has been concerned about the stickiness of core inflation, and the February report is unlikely to provide much solace. We continue to expect the RBI to hike the repo rate by 25bp in the April meeting, on sticky core inflation, which would take the peak rate to 6.75% by April-2023."

DBS noted ... " February inflation remained stubbornly high at 6.4% yoy, in line with our forecast and compared to 6.5% month before. Headline prints have been in breach of the 2-6% target range in ten of the past twelve months. Sticky non-tradables and remnant passthrough of high input costs have kept retail inflation higher than the wholesale price trend. Upside risk to RBI’s 1Q23 inflation forecast, firm core prints and above-target CPI in Jan-Feb23, are likely to see a majority of the MPC vote for a 25bp hike in April, with an unchanged stance. Beyond that, we expect a pause on rates to allow the lagged impact of hikes to filter through, a likely benign inflation profile (with an eye on risks) and attention on growth conditions."