Interest rates in much of the world are likely to be headed lower in 2024 but the continued economic resilience and hotter than expected inflation print suggest that the timeline for easier monetary policy is likely to be later than and less pronounced than currently anticipated. Central banks across the world are likely to look for more tangible signposts suggesting services disinflation is underway before commencing monetary policy loosening. Domestically economic growth in Q3 likely remained strong owing to sustained urban demand and robust growth in the services sector but a slight slowing of industrial activity and a weak agriculture sector is likely to weigh on the GDP print. Although, the data for January suggest the economic momentum continued, we remain cautious of the volatile labour market and any escalation in geopolitical tensions. Given robust growth, continued disinflation in core components and persistence of risks from food prices, we do not expect the central bank to cut rates before Q2 FY25.
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