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RBI monetary policy: Pause now, cut in December

Expect Patel to make a strong case for lending rate cuts, writes the author

Indranil Sengupta 

Indranil Sengupta We expect the Reserve Bank of India’s  Monetary Policy Committee to pause on Wednesday and cut rates by 25 basis points (bp) on December 6, to signal bank lending rate cut, before the ‘busy’ October-March industrial season intensifies. We see six compelling reasons for easing.  First, growth at 5.5 per cent, as per the old GDP series, even factoring in a bounce on demonetisation shock-led base effects, is well below our estimated 7 per cent potential. Second, the CPI inflation is likely to normalise to around 4.5 per cent in the first half of FY18, well ...

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First Published: Fri, September 29 2017. 01:19 IST
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