The Reserve Bank of India may opt for rate cuts in December as well as in 2020 as a rise in recent inflation is higher than the central bank’s growth estimates, says a report.
A report by DBS bank stated that the apex bank’s decision during October’s policy review meeting disapproved the monetary policy committee members’ unanimous decision to keep rates lower for as long as necessary.
“In our view, a modest overshoot in recent inflation outruns is outweighed by downside risks to RBI’s growth estimates, keeping the door open for rate cuts in December and into 2020,” said the bank.
The report also observed that the disagreements between fiscal related concerns and RBI continues to dictate rupee bonds.
Furthermore, the concerns are combined with a poor performing GDP, putting pressure on fiscal performance. As a counter, efforts to suppress the pressure from divestment are below average.
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