ALSO READRBI keeps repo rate unchanged at 6.5 pct, says inflation risks have gone up High retail inflation diminishes India's rate cut hopes Indian inflation cools to one-year low, offers room for more rate cuts India's August retail inflation at five-month low, raises hopes of rate cut RBI to announce second bi-monthly monetary policy review today
The Reserve Bank of India's decision in the credit policy to cut the repo rate by 25 basis points and lower the target for real interest rate suggests that significantly easier monetary policy is coming, says Chris Wood, the author of CLSA's newsletter GREED and fear.
"This is not irresponsible since credit growth has been running almost in line with nominal GDP growth for five years," says Wood as he expects to see more rate cuts next year.
India's retail inflation in September fell to a 13-month low of 4.31 percent mainly on the back of a sharp fall in food prices.
"From an Indian equity standpoint, monetary easing in the context of a stable currency is an obvious positive," said Wood in a newsletter.
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