India: Expect a further and final 25bps rate cut from RBI by year end - TDS

Research Team at TDS, notes that the RBI left all policy rates unchanged today, as had been widely expected.

Key Quotes

“We do continue to expect a further and final 25bps rate cut in this cycle, but not before year-end, and anyway not before it becomes clearer that the 4±2% inflation target for March 2017 is attainable.

For now, CPI inflation remains well within the upper half of the 4-6% target range, while the CPI run rate has been fairly stable in the 4.5-5.5% range over the past three months. This means that in the absence of external or domestic price shocks, including an unlikely third consecutive year of below-average rainfalls, inflation should not deviate much from the 5% level.”