Devangshu Datta: A bad-news-is-good-news scenario

If you take the combination of weak manufacturing trends, lower-than-expected inflation and an overvalued rupee, a rate cut by the RBI certainly seems obvious

Devangshu Datta

The last fortnight has seen several central banks releasing their respective advisories and policy updates. Monetary policy has mostly been left unchanged by the major banks even though the statements have been dovish. This has turned into a "bad news is good news" scenario: growth estimates have been cut and traders have rejoiced since rate cuts seem more likely than hikes. The Reserve Bank of India's (RBI) next policy statement is on April 5. Consensus favours a rate cut. This is already priced into market action. The data in favour of a cut would seem to be fairly ...