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RBI to cut rates in early 2017, aided by low inflation: Reuters poll

Inflation cooled to a 13-month low of 4.31 per cent in September

Reuters  |  Bengaluru 

Urjit Patel
Urjit Patel

The Reserve Bank of is expected to take advantage of expectations that will remain low in the near-term and interest again early next year with an aim to boost already-solid growth a little bit more, a Reuters poll found.

New Governor Urjit Patel and his six-member Monetary Policy Committee used the same rationale for their surprise 25 basis point (bps) to 6.25 per cent earlier this month, the lowest since November 2010.

cooled to a 13-month low of 4.31 per cent in September and the latest Reuters poll of economists expect it to average 4.8 per cent in the January-March quarter of 2017, just under the RBI's near-term target.

"The significant run-up in between April and July was mainly driven by food prices. But thanks to normal rains, it could reverse quickly, taking to well below (the) RBI's early-2017 target of 5 per cent," wrote Pranjul Bhandari, chief economist for at HSBC.

Since the start of 2015, the has chopped 175 bps from its key repo rate. But after the next expected to 6.0 per cent, the central bank is forecast to hold steady for the rest of the 12-month survey horizon.

A further rate would help the Indian government in its efforts to boost economic growth to above 8 per cent.

It was last measured at 7.1 per cent in the March-June quarter, one of the strongest in the world but still not fast enough to create enough new jobs to absorb all the one million people who join the workforce every month.

The poll forecast gross domestic product would grow 7.7 per cent in the fiscal year to end-March 2017 and 7.8 per cent in the following year, slightly more than the International Monetary Fund's latest projection of 7.6 per cent for both years.

HSBC's Bhandari, who is forecasting 7.3 per cent growth for next year, wrote: "...higher urban consumption supported by government wage hikes, sufficient banking sector liquidity and robust inflows are likely to keep growth buoyant."

India's government, led by Prime Minister Narendra Modi, has introduced a raft of new economic policies since coming into power two years ago, most importantly a goods and services tax bill that will replace multiple federal and state levies and transform the economy into a common market.

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RBI to cut rates in early 2017, aided by low inflation: Reuters poll

Inflation cooled to a 13-month low of 4.31 per cent in September

Inflation cooled to a 13-month low of 4.31 per cent in September

The Reserve Bank of is expected to take advantage of expectations that will remain low in the near-term and interest again early next year with an aim to boost already-solid growth a little bit more, a Reuters poll found.

New Governor Urjit Patel and his six-member Monetary Policy Committee used the same rationale for their surprise 25 basis point (bps) to 6.25 per cent earlier this month, the lowest since November 2010.

cooled to a 13-month low of 4.31 per cent in September and the latest Reuters poll of economists expect it to average 4.8 per cent in the January-March quarter of 2017, just under the RBI's near-term target.

"The significant run-up in between April and July was mainly driven by food prices. But thanks to normal rains, it could reverse quickly, taking to well below (the) RBI's early-2017 target of 5 per cent," wrote Pranjul Bhandari, chief economist for at HSBC.

Since the start of 2015, the has chopped 175 bps from its key repo rate. But after the next expected to 6.0 per cent, the central bank is forecast to hold steady for the rest of the 12-month survey horizon.

A further rate would help the Indian government in its efforts to boost economic growth to above 8 per cent.

It was last measured at 7.1 per cent in the March-June quarter, one of the strongest in the world but still not fast enough to create enough new jobs to absorb all the one million people who join the workforce every month.

The poll forecast gross domestic product would grow 7.7 per cent in the fiscal year to end-March 2017 and 7.8 per cent in the following year, slightly more than the International Monetary Fund's latest projection of 7.6 per cent for both years.

HSBC's Bhandari, who is forecasting 7.3 per cent growth for next year, wrote: "...higher urban consumption supported by government wage hikes, sufficient banking sector liquidity and robust inflows are likely to keep growth buoyant."

India's government, led by Prime Minister Narendra Modi, has introduced a raft of new economic policies since coming into power two years ago, most importantly a goods and services tax bill that will replace multiple federal and state levies and transform the economy into a common market.

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Business Standard
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RBI to cut rates in early 2017, aided by low inflation: Reuters poll

Inflation cooled to a 13-month low of 4.31 per cent in September

The Reserve Bank of is expected to take advantage of expectations that will remain low in the near-term and interest again early next year with an aim to boost already-solid growth a little bit more, a Reuters poll found.

New Governor Urjit Patel and his six-member Monetary Policy Committee used the same rationale for their surprise 25 basis point (bps) to 6.25 per cent earlier this month, the lowest since November 2010.

cooled to a 13-month low of 4.31 per cent in September and the latest Reuters poll of economists expect it to average 4.8 per cent in the January-March quarter of 2017, just under the RBI's near-term target.

"The significant run-up in between April and July was mainly driven by food prices. But thanks to normal rains, it could reverse quickly, taking to well below (the) RBI's early-2017 target of 5 per cent," wrote Pranjul Bhandari, chief economist for at HSBC.

Since the start of 2015, the has chopped 175 bps from its key repo rate. But after the next expected to 6.0 per cent, the central bank is forecast to hold steady for the rest of the 12-month survey horizon.

A further rate would help the Indian government in its efforts to boost economic growth to above 8 per cent.

It was last measured at 7.1 per cent in the March-June quarter, one of the strongest in the world but still not fast enough to create enough new jobs to absorb all the one million people who join the workforce every month.

The poll forecast gross domestic product would grow 7.7 per cent in the fiscal year to end-March 2017 and 7.8 per cent in the following year, slightly more than the International Monetary Fund's latest projection of 7.6 per cent for both years.

HSBC's Bhandari, who is forecasting 7.3 per cent growth for next year, wrote: "...higher urban consumption supported by government wage hikes, sufficient banking sector liquidity and robust inflows are likely to keep growth buoyant."

India's government, led by Prime Minister Narendra Modi, has introduced a raft of new economic policies since coming into power two years ago, most importantly a goods and services tax bill that will replace multiple federal and state levies and transform the economy into a common market.

image
Business Standard
177 22

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