RBI likely to cut its repo rate by 25bps – TDS

Analysts at TD Securities are expecting the RBI to cut its repo rate by 25bps to 4.90% at this meeting.

Key Quotes

“The RBI will however, have to balance continued weakness in economic data, with a jump in inflation. Since the last meeting industrial production has fallen sharply, while both exports and imports have continued to fall and the composite PMI has remained in contraction territory.”

“Even the RBI's downwardly revised GDP forecast of 6.1% could be at risk. However, CPI could throw a spanner in the works, with October CPI rising to a higher than expected 4.62% y/y due to surging food prices. On balance we think that RBI will cut, with growth worries taking precedent.”