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India Policy Rate 6.5% (consensus 6.5%) in Feb-24

• The Reserve Bank of India (RBI) has opted to maintain the Policy Rate at 6.5%, in line with economic forecasts, signalling a cautious approach to balancing growth and inflation within its target range.
• Despite a recent uptick in inflation, the MPC's decision reflects confidence in the underlying strength of the domestic economy and the effectiveness of previous monetary policy adjustments.
• Future policy decisions on interest rates will hinge on inflation trends, the impact of global economic developments, and ensuring the transmission of monetary policy while supporting sustainable economic growth.

Four Important EM Elections in 2024

• Elections in Indonesia and India should both result in policy continuity as far as the economy is concerned. In South Africa, the election outcome will likely lead to a further deterioration in governance. As for Mexico, MORENA will probably retain the presidency but fall short of its target two-thirds majority in the legislature.

By Alastair Newton

India CPI Inflation 5.69% y-o-y (consensus 5.9%) in Dec-23

- India's CPI inflation for December 2023 was 5.69% y-o-y, slightly lower than the consensus estimate of 5.9% but above the previous month's reading of 5.55%.
- This figure represents the highest growth in CPI inflation since August 2023 inflationary pressures and is close to the one-year average.

Outlook 2024: The Year Of The Dragon #2

• For the past 18 months or so, there has been much talk of ‘peak China’ economically. As we enter the year of the dragon, should we add to this the semi-related question of whether we are also witnessing China’s diplomatic peak?

By Alastair Newton