RBI: No rate cut, just a GDP cut – ANZ

ANZ analysts point out that in a surprisingly unanimous decision, the Reserve Bank of India (RBI) has kept the policy repo rate on hold after five consecutive rate cuts this year.

Key Quotes

“The decision was based on the recent rise in inflation as well as the prospects that it will stay elevated in the near term. At the same time, India’s GDP growth outlook has been further downgraded.”

“The problem unfortunately is that the recent rise in inflation has been concentrated in a few food items but core inflation has been trending lower.”

“On the positive side, the policy stance will continue to be accommodative implying that the RBI has not closed the window to resuming rate cuts. We therefore maintain our forecast for a 25bp cut in February 2020.”