Goldman now expects 50 bps rate cut by mid-2013
Reuters Market Eye - Goldman Sachs now expects the Reserve Bank of India to cut the repo rate by 50 basis points by mid-2013, versus its previous forecast of an equivalent cut only in the March quarter of 2014.
"This is due to a weak inflation print in March and the sharp recent declines in the prices of oil, gold, and the trade deficit, which suggest a near-term improvement in the current account deficit," the investment bank says in a note.
Goldman Sachs also lowered its inflation forecast for FY14 to 6 percent from 6.8 percent due to large near-term reductions in the inflation trajectory, noting it was 'surprised' by the extent of recent decline in WPI inflation.
However, the investment bank adds, the timing of policy rate cuts beyond May is more contentious, with the central bank likely to cut rates once more in the summer.
Goldman says it takes out its 50 bps cut pencilled in 1Q 2014 after bringing it forward by mid-2013.
(Reporting by Subhadip Sircar)
- Tweet this
- Share this
- Digg this
- UPDATE 1-Russia transfer of rocket system to Ukraine rebels imminent- Pentagon
- UPDATE 3-Nigeria government confirms Ebola case in megacity of Lagos
- Dell, BlackBerry downplay threat from Apple-IBM alliance
- India threatens to derail WTO deal, prompts angry U.S. rebuke
- UPDATE 2-Tyson Foods to shut 3 factories, cut 950 jobs
Israel and Palestinian militant groups in the Gaza Strip have agreed to a U.N.-requested 12-hour humanitarian truce to begin on Saturday morning, and efforts to secure a long-term cease-fire moved ahead. Full Article
Amazon's far-reaching ambitions, lack of profits, unnerve investors Full Article