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RBI may front-load rate cut to Dec to support growth: DBS

The Monetary Policy Committee headed by RBI Governor Urjit Patel last month cut benchmark interest rates by 0.25 per cent to 6.25%

Press Trust of India  |  New Delhi 

An image of RBI headquarters in Mumbai (Photo: Kamlesh Pednekar)
An image of RBI headquarters in Mumbai (Photo: Kamlesh Pednekar)

While global uncertainties and rupee volatility suggest first quarter of 2017 is a better time to ease rates, the Reserve Bank may bring forward the rate cut to December to support growth and tap favourable outlook, says a DBS report.

According to the global financial services major, following the move, the dampening impact on economic activity is clear, especially on consumption, supply chain and cash dependent businesses and over this quarter and the next.



"On policy, while external uncertainties and rupee volatility suggest first quarter of 2017 is a better timeline to ease rates, the central bank might prefer to bring forward the rate cut to December to support growth and tap favourable outlook," DBS said in a research note.

The Monetary Policy Committee headed by Governor Urjit Patel last month cut benchmark by 0.25 per cent to 6.25 per cent. The next policy review is on December 7.

Prime Minister had announced the of Rs 1,000 and Rs 500 notes on November 8, making these notes invalid.

As per the report, attention is likely to be beyond third quarter 2016 GDP growth numbers and instead on managing the fallout of the effort.

"Authorities are also focused on the implementation aspects, with withdrawal and usage restrictions tweaked on a regular basis to ease short-term strain," the report said, adding that "overall, progress has and will be gradual and incremental."

Deposits are likely to accrue over the next month, but the strain will ease as withdrawal limits are eased and access to other modes become easier, it said.

is expected to affect economic activity, especially consumption, supply chain and cash dependent businesses, as well as over this quarter and the next.

"This assumes that the transition period is complete by the first quarter of 2017," the report added.

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RBI may front-load rate cut to Dec to support growth: DBS

The Monetary Policy Committee headed by RBI Governor Urjit Patel last month cut benchmark interest rates by 0.25 per cent to 6.25%

The Monetary Policy Committee headed by RBI Governor Urjit Patel last month cut benchmark interest rates by 0.25 per cent to 6.25% While global uncertainties and rupee volatility suggest first quarter of 2017 is a better time to ease rates, the Reserve Bank may bring forward the rate cut to December to support growth and tap favourable outlook, says a DBS report.

According to the global financial services major, following the move, the dampening impact on economic activity is clear, especially on consumption, supply chain and cash dependent businesses and over this quarter and the next.

"On policy, while external uncertainties and rupee volatility suggest first quarter of 2017 is a better timeline to ease rates, the central bank might prefer to bring forward the rate cut to December to support growth and tap favourable outlook," DBS said in a research note.

The Monetary Policy Committee headed by Governor Urjit Patel last month cut benchmark by 0.25 per cent to 6.25 per cent. The next policy review is on December 7.

Prime Minister had announced the of Rs 1,000 and Rs 500 notes on November 8, making these notes invalid.

As per the report, attention is likely to be beyond third quarter 2016 GDP growth numbers and instead on managing the fallout of the effort.

"Authorities are also focused on the implementation aspects, with withdrawal and usage restrictions tweaked on a regular basis to ease short-term strain," the report said, adding that "overall, progress has and will be gradual and incremental."

Deposits are likely to accrue over the next month, but the strain will ease as withdrawal limits are eased and access to other modes become easier, it said.

is expected to affect economic activity, especially consumption, supply chain and cash dependent businesses, as well as over this quarter and the next.

"This assumes that the transition period is complete by the first quarter of 2017," the report added.
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Business Standard
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RBI may front-load rate cut to Dec to support growth: DBS

The Monetary Policy Committee headed by RBI Governor Urjit Patel last month cut benchmark interest rates by 0.25 per cent to 6.25%

While global uncertainties and rupee volatility suggest first quarter of 2017 is a better time to ease rates, the Reserve Bank may bring forward the rate cut to December to support growth and tap favourable outlook, says a DBS report.

According to the global financial services major, following the move, the dampening impact on economic activity is clear, especially on consumption, supply chain and cash dependent businesses and over this quarter and the next.

"On policy, while external uncertainties and rupee volatility suggest first quarter of 2017 is a better timeline to ease rates, the central bank might prefer to bring forward the rate cut to December to support growth and tap favourable outlook," DBS said in a research note.

The Monetary Policy Committee headed by Governor Urjit Patel last month cut benchmark by 0.25 per cent to 6.25 per cent. The next policy review is on December 7.

Prime Minister had announced the of Rs 1,000 and Rs 500 notes on November 8, making these notes invalid.

As per the report, attention is likely to be beyond third quarter 2016 GDP growth numbers and instead on managing the fallout of the effort.

"Authorities are also focused on the implementation aspects, with withdrawal and usage restrictions tweaked on a regular basis to ease short-term strain," the report said, adding that "overall, progress has and will be gradual and incremental."

Deposits are likely to accrue over the next month, but the strain will ease as withdrawal limits are eased and access to other modes become easier, it said.

is expected to affect economic activity, especially consumption, supply chain and cash dependent businesses, as well as over this quarter and the next.

"This assumes that the transition period is complete by the first quarter of 2017," the report added.

image
Business Standard
177 22