According to the US economists of global financial services major Bank of America Merrill Lynch (BofAML), going by the latest Federal Open Market Committee (FOMC) meeting, the US Fed is likely to withdraw liquidity from September.
"We expect the RBI to recoup forex reserves with our US economists now expecting the Fed to withdraw liquidity from September," BofAML said in a research note.
On RBI's policy stance, the report said, a 25 basis points or 0.25 percentage point rate cut in August is likely as the next Fed hike is expected only in December.
"On balance, we continue to expect the RBI to cut 25 bps on August 2, as our US economists now expect the Fed to push out the next hike to December. Withdrawal of Fed liquidity should also contain global commodity prices and by extension, 'imported' inflation," the report added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)