Reserve Bank of India may consider a rate cut in first half of 2017: DBS
The Reserve Bank of India (RBI) is expected to go for a rate cut in the first half of this year, largely owing to 'below estimate' inflation, says a DBS report.
Rising prices of petrol and diesel fuelled Wholesale Price Index (WPI) inflation to 3.39% in December 2016.
According to the global financial services major, the WPI readings are likely to head towards 4% in the first quarter (Q1) of this year from 3.4% in October-December quarter of 2016.
These readings are far from "threatening" levels and still hovering below the 5.4% averaged in the past decade.
ALSO READ: RBI may cut repo rate by 25 basis points in February: HSBC report
"On policy, the RBI is likely to monitor consumer price index-based inflation (CPI) more closely. Below-estimate inflation and soft incoming data is expected to prod the central bank to consider a rate cut in first half of this year," DBS said in a research note.
Though timings of the rate cut, between the February and April policy meetings is a 'close call', following which rates are likely to 'plateau' it said.
Beyond a rate cut in the first half of this year, the scope for further rate cuts are unlikely largely owing to risks from oil prices, good and services tax (GST) implementation, growth pick-up, public-sector allowance hikes and higher US interest rates, it added.
On December 7, the central bank kept interest rate unchanged despite calls for lowering it and also lowered the economic growth projection by half a percentage point to 7.1% in the first policy review post demonetisation.
The central bank will hold its next monetary policy meet on February 8.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Senior Citizen Latest FD Rates: Know what major banks like SBI, PNB, Canara Bank, HDFC Bank, ICICI Bank are providing on fixed deposits
Gratuity Calculator: Rs 38,000 as last-drawn basic salary, 5 years and 5 months of service; what will be gratuity amount?
EPFO Pension Schemes: Early pension, retirement pension, nominee pension and 4 other pension schemes that every private sector employee should know
Top 5 Small Cap Mutual Funds with best SIP returns in 1 year: See how Rs 25,000 monthly investment has grown in each scheme
Top 7 SBI Mutual Funds With Best SIP Returns in 1 Year: Rs 25,000 monthly SIP investment in No.1 fund has jumped to Rs 3,58,404
05:12 PM IST