India Monetary Policy Review - NAB

John Sharma, Economist – Sovereign Risk and Tom Taylor, Head of International Economics at the National Australian Bank (NAB) express their take on the latest Indian monetary policy decision announced last week.

Key Quotes:

“The RBI, somewhat surprisingly, maintained the policy repo rate at 6.25%. Uncertainty about the effects of demonetization and sticky core inflation were factors. The Central Government’s Budget reflects a prudent fiscal stance, with the fiscal deficit anticipated at 3.2% for 2017-18.”

“NAB Economics is forecasting one more rate cut to 6% (most likely August), the last of the current rate-cutting cycle. Higher crude prices, a weak monsoon projection and uncertainty in the external environment might preclude a further rate cut.”