Mitul Kotecha – Senior Emerging Markets Strategist at TD Securities (TDS) – expects the RBI to cut its repo rate by 25bps to 4.90% at its meeting on Thursday 5 December.

Key Quotes:

“The RBI will, however, have to balance continued weakness in economic data with a jump in inflation. On balance we think growth worries will take precedence over the recent rise in inflation, but higher inflation will prevent the RBI from cutting more aggressively than 25bp.”

“Until recently the RBI could cut rates without worrying about inflation as CPI had been well behaved. This all changed in October, with CPI rising to a 16 month high of 4.62% y/y, a jump of almost 1% m/m and above the RBI's medium term target of 4%. Surging food prices were the main culprit behind the spike though higher fuel prices also played an outsized role. Food and beverage price inflation rose 6.93% y/y, with vegetable prices rising at a 26.1% y/y pace, led by onion and tomato prices.”

“It was not all bad news however, core CPI (ex food, fuel and light) and core-core CPI (ex-food, all fuels, gold and silver) both moderated to multi-year lows, showing that broader price pressures remain well contained as the economy slows. While food prices will likely continue to exert upward pressure on headline inflation over the short term, we think the impact will be short-lived, leaving the RBI to focus on combating growth weakness amid a benign core inflationary backdrop.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

GBP/USD off 7-month highs, still firmer as Tories hold the lead

GBP/USD retraces from the new seven-month highs of 1.3180 but remains strongly bid, as weekend polls have reaffirmed a solid lead for PM Johnson's Conservatives. Cable dropped on Friday amid upbeat US data.

GBP/USD News

EUR/USD steadying above 1.1050 amid upbeat German export data

EUR/USD is trading above 1.1050, attempting a recovery after Germany reported an increase in exports in October. EUR/UDS dropped sharply on Friday amid upbeat US Non-Farm Payrolls and weak German industrial output. 

EUR/USD News

Forex Today: US-Sino trade tensions prevail, Boris closer to victory, EUR/USD licking its wounds

Trade talks: President Donald Trump has called on the World Bank to stop lending to China, a move that may aggravate tensions, with only six days to go until Washington is set to slap new tariffs on Beijing. Negotiations continue.

Read more

Gold: Sidelined after biggest daily decline in four weeks

Gold is lacking a clear directional bias in Asia, having registered its biggest single-day decline in four weeks on Friday. China's data may embolden President Trump to take more aggressive measures. 

Gold News

USD/JPY in search of a firm direction, stuck in a range above mid-108.00s

USD/JPY was seen oscillating in a narrow band and consolidated last week’s losses. US-China trade uncertainties continued underpinning the JPY’s safe-haven status. Investors now seemed reluctant ahead of the latest FOMC monetary policy update.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures