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Sharp rate cuts are in store in 2015, as the Reserve Bank of India’s commitment to bring down inflation might make room for these, even if the US Federal Reserve starts raising interest rates, experts believe.
RBI is committed to bringing down retail inflation to eight per cent by January 2015 and six per cent by January 2016.
Though CPI-based inflation rose to 7.96 per cent in July from 7.46 per cent in June, it is seen stabilising in the months ahead.
“Lower inflation would enhance the efficiency of India's economy.
"A credible disinflation process would help lower long-term bond yields in anticipation of lower inflation risks and, ultimately, a meaningful sustainable reduction in policy rates,” said UBS Securities India in a note to clients titled '200 bps lower interest rates in less than 2 years', released on Thursday.
The note added that monetary policy would lag inflation and RBI will keep policy rates on hold till late FY15.
RBI had previously raised the repo rate in January, by 25 bps to eight per cent.
RBI is committed to bringing down retail inflation to eight per cent by January 2015 and six per cent by January 2016.
Though CPI-based inflation rose to 7.96 per cent in July from 7.46 per cent in June, it is seen stabilising in the months ahead.
“Lower inflation would enhance the efficiency of India's economy.
"A credible disinflation process would help lower long-term bond yields in anticipation of lower inflation risks and, ultimately, a meaningful sustainable reduction in policy rates,” said UBS Securities India in a note to clients titled '200 bps lower interest rates in less than 2 years', released on Thursday.
The note added that monetary policy would lag inflation and RBI will keep policy rates on hold till late FY15.
RBI had previously raised the repo rate in January, by 25 bps to eight per cent.
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��