50 bps rate cut likely during Jan-Mar quarter: Citigroup
According to a report, the 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 growth in its next policy meet.
The third quarter review will be unveiled on January 29.
"Going forward, we maintain our view of 75 bps of easing in 2013, with 50 bps likely during JanuaryżMarch," Rohini Malkani, economist at Citi, wrote in the research report.
One basis point is equivalent to 0.01 per cent.
In the mid-quarter monetary policy review on December 18, RBI kept key interest rates unchanged.
The Reserve Bank of India (RBI) left the short-term lending (repo) rate and the cash reserve ratio -- the amount of deposits banks have to park with RBI-- unchanged at 8 per cent and 4.25 per cent, respectively.
The report further added that "easing core inflation and expectation of lower food and manufacturing prices are key factors behind the likelihood of growth-focused policy in the next months".
Retail inflation, based on consumer price index (CPI), remained close to double digits at 9.90 per cent in November, while, the WPI inflation in November stood at 7.24 per cent.
Though these levels are much above the Reserve Bank's comfort zone of 5-5.5 per cent, inflation is showing some signs of easing in recent months.
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