Moneycontrol
Dec 07, 2016 02:22 PM IST | Source: CNBC-TV18

RBI may cut rate by 50 bps; liquidity, inflation call eyed: Pros

The Reserve Bank of India will hold its bi-monthly policy meet today. Experts expect 25 basis point (bps) cut. But, probability of a 50 bps cut cannot be ruled out, says Vivek Rajpal, Rate strategist at Nomura India.


The Reserve Bank of India will hold its bi-monthly policy meet today. Experts are expecting a 25 basis point (bps) cut. But, probability of 50 bps cut cannot be ruled out, says Vivek Rajpal, Rate strategist at Nomura India.

The central bank’s commentary on inflation, growth guidance and liquidity, especially after demonetization, will also be watched closely.

Anubhuti Sahay, Head-South Asia Economic Researh, Standard Chartered Bank said that the central bank is likely to adopt a conservative approach on back of global and domestic uncertainties.

Standard Chartered has cut its grow guidance for FY17 to 6.8 percent from 7.2 percent earlier. Growth in FY18 will be at near 7.2 percent with GST accounted for, Sahay said.

Meanwhile, Shankar Sharma, Vice-Chairman and Joint Managing Director at First Global, said that markets are factoring in a 25 basis points (bps) rate cut and a 50-bps cut will likely come as a surprise.


Sharma added that he expects a momentary relief rally in markets in the central bank cuts rates by 50 bps. The market will recover only if prudent fiscal policy is announced in the Budget, he added.


In the past 2-2.5 years, RBI has cuts rates often, however, it hasn’t reflected in earnings growth for India Inc, Sharma said. He added that rate cuts are not enough to correct the problem. A good fiscal policy impetus from the government is required to push growth, he asserted.





A Prasanna, Chief Economist at I-Sec also shared his expectations from the RBI policy. 

Watch videos for more..
Sections
Follow us on
Available On