RBI May Cut Interest Rates As Early As This Week: Analysts
NEW DELHI: The Reserve Bank may cut key interest rates, as the fiscal measures announced in the Union Budget are unlikely to disturb the "disinflation" trend, say analysts.
According to global financial services firm Morgan Stanley, "The budget does not have any measures that would disturb the current entrenched disinflation trend."
"We maintain our view that RBI will cut policy rates by 125 bps by the end of 2015 with the next move coming as early as this week," Morgan Stanley's Asia economist Chetan Ahya said in a research note.
With the budget now out of the way, investors' attention will revert to the government's effort to implement more critical policy reforms, he said.
Rolling out a new fiscal consolidation roadmap, finance minister Arun Jaitley had said in the Budget that fiscal deficit would be brought down to 3.9 per cent of GDP in 2015- 16, and then further to 3.6 per cent and finally to 3 per cent by 2016-17 and 2017-18, respectively.
Meanwhile, HSBC in a research report said the higher fiscal stimulus in the budget is expected to restrict any further monetary policy accommodation.
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