Expectation from RBI Governor Press Conference today - Acuité Ratings & Research

Karan Mehrishi, Lead Economist at Acuité Ratings & Research:

"Acuité believes that there is a possibility of a surprise rate cut before April to the tune of 50 bps, following the examples of the USD FED and BOE rate cuts. A rate cut, if any, at this point may not be driven by inflation concerns. Even liquidity in the system is substantial. It will be more of a market calming move. The coronavirus threat is assumed to be a trigger point behind the move.

Food inflation is also expected to be moderate with the Rabi harvest and core inflation likely to remain low. The yield differentials with foreign debt is also comfortable at this point so a rate cut may not put incremental risk to inflows. We even expect the reduction in CRR to increase liquidity along with tweaking the non SLR HQLA requirements."

Source : Equity Bulls

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