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:

Surprise Rate Cut

Reuters Showcase

Insurance Bill

Insurance Bill

Opposition support bolsters prospects for insurance reforms  Full Article 

SBI Share Sale

SBI Share Sale

SBI's up to $2.4 billion share sale likely by end April - sources   Full Article 

Eicher Share Sale

Eicher Share Sale

Truck maker Volvo sells shares in Eicher Motors  Full Article 

Beef Ban

Beef Ban

After beef ban, Hindu groups force abattoirs to close   Full Article 

Monsoon Season

Monsoon Season

Exclusive - India expects better monsoon rains this year  Full Article 

Services Growth

Services Growth

Services growth at eight-month high in Feb - HSBC PMI  Full Article 

'India's Daughter'

'India's Daughter'

Documentary on 2012 Delhi gang rape banned in India  Full Article 

Capex Slashed

Capex Slashed

Cairn India slashes 2015-16 capex on falling crude   Full Article 

Coal Imports

Coal Imports

India coal imports in Feb jump from year ago, but drop m/m  Full Article 

Reuters India Mobile

Reuters India Mobile

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