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  1. Rate cut now likely after April review

Rate cut now likely after April review

After the Reserve Bank of India lowered key rates on March 4, government bonds...

By: | Updated: March 10, 2015 1:44 AM

After the Reserve Bank of India lowered key rates on March 4, government bonds surged to their highest in nearly 20 months. Market
participants expect the next RBI rate cut after its scheduled April policy review as at 5.1% year-on-year in January consumer price index-based inflation is already in the upper band of the central bank’s new medium-term inflation target.

Bond markets are also reacting positively as the government’s net borrowing for FY16 is pegged at R4.56 lakh crore compared with R4.47 lakh crore in FY15 revised estimates. And even the quality of fiscal consolidation is better as the share of subsidies is declining and the share of capex is rising as a percentage of GDP.

Rate-cut

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