Reserve Bank of India to cut rates one more time?

HONG KONG – The French investment bank Natixis expects the Reserve Bank of India (RBI) to trimmits policy rate by 25bp at is upcoming meeting on April 5 due to weakening industrial production and deteriorating exports.

“The Government’s smaller-than-expected deficit target for the fiscal year ending March 31, 2017 of -3.5% is giving space for Governor Raghuram Rajan to support the economy through one more rate cut,” Natixis says.

“Inflation, although still sticky, slowed to 5.2% YoY in February from 5.7% in January. This is still below the medium-term CPI target of 7%. Industrial production contracted further to -1.5% YoY in January from -1.2%, showing signs of weakness.

“Exports, too, contracted in February by -5.7% YoY from -13.6% due to a relatively expensive INR.

“We expect this to be the last cut for the RBI this year as we expect the Fed to raise rates in June.” www.natixis.com (ATI).