Interest rate cut by RBI on March 19 likely: BofA-ML
Bank of America-Merrill Lynch (BofA-ML) today said with possibility of GDP numbers coming down to below 5 per cent for the December quarter, the Central bank may shift its stance to supporting growth from containing inflation.
"We grow more confident of our call of RBI switching to support growth from exclusively fighting inflation. January inflation, at 6.62 per cent, came in well below expectations.
Still, with the December quarter GDP growth set to dip below 5 per cent, we expect the RBI to advance policy rate cuts (by 25 bps each) on March 19 and May 3," said the report.
Earlier this week, the Central Statistical Office surprised with its advance estimate, projecting a 5 per cent GDP growth this fiscal, which could be the lowest growth rate in a decade after FY'02 when the economy grew by 4.3 per cent.
The signals from factory output data also appear poor as IIP contracted by 0.6 per cent in December, belying expectations that the economy had bottomed out. The wholesale price index-based inflation eased to 6.62 per cent in January, from 7.18 per cent a month ago.
Inflation in manufactured items category witnessed a decline and stood at 4.81 per cent in January, down from 5.04 per cent in the
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