Dec 06, 2016 02:41 PM IST | Source: CNBC-TV18

Room for another rate cut post Dec on food inflation drop: HSBC

While a 25 basis points interest rate cut is already factored, falling food prices could prompt the Reserve Bank of India to cut rates a second time by 25 basis points, feels Pranjul Bhandari, Chief India Economist at HSBC.

The Reserve Bank of India (RBI) is set to announce its bi-monthly policy on December 7. Market and bankers are betting on a 25 basis points reduction in the interest rate.

Pranjul Bhandari, Chief India Economist at HSBC concurs with the expectation of rate reduction of 25 bps while suggesting there is enough room for another similar rate cut too. 

Speaking to CNBC-TV18, she said the rate cut was already expected on the back of falling food prices. Growth is weak and it was weak even before the roll-out of the demonetisation scheme, she says.

Demonetisation will lead to average growth in quarter three and quarter four at 5.5 percent. Hence, an additional cut can be looked at if data comes in sour, she said.

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