Falling inflation is good for any economy Inflation in July has fallen for 4 straight months, from 7.79% in April to 6.71% in July. That said, it is still above the RBI's 6% comfort zone.
Three major factors over the next three months will determine if this is the formation of a bull rally or if this is another bear rally. And all these three factors are locked in a circle.
Inflation: Falling inflation will cause central banks around the world to go easy on rate hikes.
Rate hikes: If inflation falls and a recession is averted, central banks will limit rate hikes.
Earnings: If central banks limit rate hikes, credit becomes cheaper and people's spending capacity will go up, which bodes well for corporate bottomlines.
