Cpi in June Quarter Likely to Undershoot Rbi Forecast Rate Hike Probability Drops Ahead of Monsoon Risks

Falling inflation expectations push EM corporate borrowing costs 2-3% lower within the next few weeks, supporting margin expansion. Global banking sectors are also expected to benefit from sustained accommodative policy and stable credit conditions. Main risk: If monsoon risks cause localized supply shocks or if positive monetary signals are already priced in, the anticipated gains could reverse or stall.

The expected undershooting of CPI (Consumer Price Index) suggests potential easing of inflationary pressures, which typically reduces the likelihood of interest rate hikes by the Reserve Bank of India (RBI). This directly impacts the cost of capital and borrowing costs for EM_MARKETS companies. The primary channel is monetary policy/demand-side cooling.