Even though the fall in oil prices has created some space to ease rates, HSBC today said it expects RBI Governor Raghuram Rajan to maintain status quo in the forthcoming policy review and wait for the fiscal roadmap presented in the Budget.
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Rajan to wait for Budget roadmap before next rate cut: HSBC
1. Rajan To Wait For Budget Roadmap
Before Next Rate Cut: HSBC
Even though the fall in oil prices has created some space to ease rates, HSBC today said
it expects RBI Governor Raghuram Rajan to maintain status quo in the forthcoming policy
review and wait for the fiscal roadmap presented in the Budget 2016.
"We do not think RBI will cut rates on February 2," it said in a note.
The foreign brokerage said even though oil has "opened some space", the exact quantum
of the benefit will only be determined once the markets stabilise, and also by the stance of the
Central government, which has till now let pass only half of the benefit by raising duties on oil
products.
"The Budget 2016-17 on February 29 should show how this extra space will be shared
between monetary and fiscal policies," the report noted.
The RBI will also be closely watching the Budget fine print, it said, adding its effect on
inflation and financial stability will be closely watched.