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RBI likely to step up forex buying; rate cut on cards

Press Trust of India  |  New Delhi 

The Reserve is expected to step up buying and may go for a 25 basis points cut in on August 2, says a report.

According to the US economists of global financial services major of America Merrill Lynch (BofAML), going by the latest (FOMC) meeting, the US Fed is likely to withdraw liquidity from September.

"We expect the RBI to recoup 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.

In the monetary policy review on June 7, the RBI left key rates unchanged with Governor Urjit Patel noting that the central wanted to be more sure that will stay subdued.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, June 15 2017. 16:57 IST