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Credit Suisse bats for 50 bps rate cut in RBI policy review

By Religare
Credit Suisse bats for 50 bps rate cut in RBI policy review
Switzerland-based rating agency Credit Suisse has said that the Reserve Bank of India is likely to cut key interest rates by 0.50 per cent, to 7.5 per cent, in the forthcoming monetary policy review amid easing inflationary pressures.

The global rating agency in its report said, "Positive surprises in the recent WPI inflation data - both headline and core - and likely ebbing of inflationary pressures may prompt the central bank to cut key interest rate in its next policy meet."

"Following a break of nine months, we expect the Reserve Bank to cut the repo rate at its January 29 meeting, probably by 50 basis (0.5%) points to 7.5%," it added.

Batting for ease in monetary policy, Credit Suisse Research Analyst Robert Prior-Wandesforde said, "Going forward, the repo rate is likely to drop to 6.75% by July 2013, as the core and headline WPI inflation is likely to drop below 4% and 6% respectively by mid-2013."

Earlier, Credit Suisse has lowered India's growth forecast for the current fiscal to 5.7 percent from 5.9 percent amid cautious optimism. However, the rating agency has maintained that the economy has bottomed and will see a moderate recovery during 2013.

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