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India: RBI cuts interest rate again

Summary:
As widely expected, the Reserve Bank of India announced a cut to its policy interest rate last week. We expect that monetary policy will likely stay accommodative in order to support growth going forward.The Reserve Bank of India (RBI) cut its policy interest rate (RBI repo rate) by 25 basis points (bps) last week, bringing it down to 6.0%. This was the RBI’s second interest rate cut this year under its new governor Shaktikanta Das. With this move, the RBI has fully reversed last year’s rate hikes. Since the change of RBI governor in December 2018, there has been a U-turn in the Indian central bank’s monetary policy to “neutral” from “calibrated tightening”.The latest cut is confirmation of this change, following a previous rate cut in February. The move was widely expected given the

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As widely expected, the Reserve Bank of India announced a cut to its policy interest rate last week. We expect that monetary policy will likely stay accommodative in order to support growth going forward.

The Reserve Bank of India (RBI) cut its policy interest rate (RBI repo rate) by 25 basis points (bps) last week, bringing it down to 6.0%. This was the RBI’s second interest rate cut this year under its new governor Shaktikanta Das. With this move, the RBI has fully reversed last year’s rate hikes. Since the change of RBI governor in December 2018, there has been a U-turn in the Indian central bank’s monetary policy to “neutral” from “calibrated tightening”.

The latest cut is confirmation of this change, following a previous rate cut in February. The move was widely expected given the current context of slowing growth, sluggish inflation and a strengthened rupee.

Looking forward, we expect the RBI to conduct at least one more rate cut this year to support growth. Our current GDP forecast for India in FY19-20 remains 7.2%.

India: RBI cuts interest rate again

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About Dong Chen
Dong Chen
Dong Chen is senior Asia economist, Pictet Wealth Management. - Twelve years of working experience in macroeconomic research - Extensive knowledge about asset allocation and multi-asset class portfolios - Rich client-facing experiences with high-net-worth clients across Asia - Rigorous training in economics and comprehensive knowledge about Asian economies and business - Strong analytical skills and solid background in statistical/econometric analysis - Strong communication / presentation skills - Native Mandarin Chinese speaker and fluent in English Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office, the Geneva Office or one of 26 other offices world-wide.

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