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Dec rate cut likely after Sept's soft CPI inflation: BofAML

RBI at its policy review meeting earlier this month kept the key interest rate unchanged at 6%

Press Trust of India  |  New Delhi 

Reserve Bank of India
Reserve Bank of India

The Reserve Bank of India (RBI) is likely to go for a 25 bps rate cut at its next policy review meet on December 6 after September (CPI) inflation came in at a soft 3.3 per cent, says a report.

"We grow more confident in our call of a 25 bps rate cut on December 6 after September came in at a soft 3.3 per cent, the same as August's downwardly revised 3.3 per cent," (BofAML) said in a research note.


The at its policy review meeting earlier this month kept the key interest rate unchanged at 6 per cent, citing upward trend in inflation.

As per CPI data, retail inflation came in at 3.28 per cent in September, unchanged from August, despite softening of vegetable and cereal prices.

According to the global financial services major, the October is expected to be around 3 per cent following the drop in tomato and onion prices and government cutting the excise duty on petrol and diesel.

"Against this backdrop, we expect the RBI's Monetary Policy Committee (MPC) to cut in December to signal a bank lending-rate cut before the 'busy' October-March industrial season intensifies," the report noted.

India's economic growth slipped to a three-year low of 5.7 per cent in the first quarter of the current fiscal, leading to calls by the industry for a rate cut.

First Published: Sun, October 15 2017. 16:15 IST
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