The Bank of India has decided to maintain the current stance regarding rate levels but economists at Standard Chartered Bank are forecasting rate cuts in the coming months.
Key quotes
“The Monetary Policy Committee (MPC) meeting has surprised the market again even as the policy rate was left unchanged at 5.15%. All six members voted for a pause and to maintain the accommodative stance. The MPC also hinted at possible future rate cuts given the subdued growth recovery, despite revising its H1-FY21 inflation forecast to 5.4-5.0%, higher than our average forecast of 4.4%.”
“Q3-FY21 CPI is expected to fall to 3.2%, below its mandated 4% threshold.”
“We maintain our view of 40bps of repo rate cuts to 4.75% in FY21; we see 25bps being delivered in August as we also expect CPI to fall below MPC’s threshold amid a gradual GDP recovery to 5.6% growth in FY21 from 5% in FY20.”
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