The Reserve Bank of India (RBI) will change its stance to “neutral” and could cut interest rates in June at the latest, according to a Reuters poll of economists.
A month ago, economists predicted rate hike cycle would begin next quarter. The outlook, however, has flipped following RBI Governor Urjit Patel’s sudden resignation on Dec. 10.
Key points (Source: Reuters)
- RBI to keep repo rate on hold at 6.5 percent in Feb, change policy stance to ‘neutral’.
- RB to cut repo rate by 25 basis points (bps) by mid-year to 6.25 percent vs the previous forecast of a 25 bps rate hike.
- India government 2018/19 fiscal deficit to be 3.5 percent of GDP; slightly higher than the government’s target of 3.3 percent.
- Indian economy to grow 7.3 percent in FY 2019/20 vs the previous forecast of 7.6 percent.
- Uncertainty around the national election outcome is the biggest risk to the Indian economy.