The Reserve Bank of India ( RBI) is expected to reward the government next week for its efforts to reform the economy and bring its finances under control by announcing its first cut in interest rates in nine months. <\/p>\n
The RBI has been growing in confidence that the government, gripped by inertia for much of last year, is finally doing its bit to lift an economy that has slumped to its slowest pace of growth in a decade.
\n\u201cThe government has gone ahead with all the promises it had made 3 to 4 months earlier. <\/p>\n
There have been pretty substantial measures on the fiscal deficit front,\u201d said Samiran Chakrabarty, head of research at Standard Chartered Bank in Mumbai. <\/p>\n
\u201cTo an extent, that will be comforting for the Reserve Bank of India.\u201d
\nInflation is also heading in the right direction as far as the central bank is concerned. Wholesale price inflation, the main price gauge, fell to a three-year low of just over 7% in December.<\/p>\n
Since mid December, yields on 10-year Indian government bonds have pulled back to 7.865% from above 8% in anticipation of a rate cut. The slide marked the first time the yield had dropped below 8% since early 2011.<\/p>\n
However, the Reserve Bank of India remains cautious with inflation around 7%. Last week, Governor Duvvuri Subbarao said inflation remained too high, a comment that dashed financial market expectations for a more aggressive rate cut of 50 basis points.<\/p>\n
Most economists expect the Reserve Bank of India to cut its policy repo rate by 25 basis points on Tuesday to 7.75% and follow it up with a cumulative 75 bps of cuts by the end of September, a Reuters poll showed last week. <\/p>\n
\u201cThe Reserve Bank of India cannot be very aggressive in rate cuts. Our view is that inflation is unlikely to fall sustainably below 7%. There are lot of suppressed inflationary pressures that will add to it,\u201d said Sonal Varma, India economist at Nomura in Mumbai. <\/p>\n
The Reserve Bank of India last cut rates in April 2012 by 50 basis points but warned at the time there would be limited scope for further cuts.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Reserve Bank of India ( RBI) is expected to reward the government next week for its efforts to reform the economy and bring its finances under control by announcing its first cut in interest rates in nine months. The RBI has been growing in confidence that the government, gripped by inertia for much of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-16360","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/16360","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/comments?post=16360"}],"version-history":[{"count":0,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/posts\/16360\/revisions"}],"wp:attachment":[{"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/media?parent=16360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/categories?post=16360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nagalandpost.net\/index.php\/wp-json\/wp\/v2\/tags?post=16360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}