Goldman Sachs expects RBI to cut rates by 25 bps

MUMBAI Mon Dec 17, 2012 4:23pm IST

The Reserve Bank of India (RBI) logo is pictured outside its head office in Mumbai November 2, 2010. REUTERS/Danish Siddiqui/Files

The Reserve Bank of India (RBI) logo is pictured outside its head office in Mumbai November 2, 2010.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

MUMBAI (Reuters) - Goldman Sachs expects the Reserve Bank of India (RBI) to cut its key interest rate by 25 basis points at its policy review on Tuesday after last week's inflation data came well below expectations, and as economic growth remains sluggish.

The investment bank expects another 25 basis point cut in the repo rate in January, according to an email sent to clients on Monday. Goldman had previously forecast the RBI would cut interest rates by 50 basis points in March.

"With both growth and inflation surprising on the downside relative to the RBI's forecast, there is a reason for the central bank to move earlier than its previous guidance," economist Tushar Poddar wrote in the note.

Data on Friday showed the wholesale price index rose 7.24 percent from a year earlier in November, below expectations for a rise of 7.6 percent. Core inflation was 4.5 percent.

The country's economy grew 5.3 percent from a year earlier in the July-September period.

A majority of analysts polled by Reuters expects the RBI to keep the repo rate on hold, with respondents split about whether it will cut the cash reserve ratio for banks.

(Reporting by Shamik Paul; Editing by G.Ram Mohan)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Cipla Shares

Cipla Shares

Cipla jumps after key generic launch.  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit.  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks.  Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter.  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage