The RBI’s timing remains uncertain, but the possibility of a 25 bps rate cut is high in the near-term, says Citigroup report. According to global financial services major Citigroup, the RBI’s timing remains uncertain, but the possibility of a 25 bps rate cut is high in the near-term. “Lower-than-feared fiscal deficit target and smaller market borrowing are positive for rates,” Citigroup said in a research note, adding “the room for rate easing is limited – 25 bps cut more likely in April than in the February policy”. The Budget pegged the fiscal deficit at 3.2% of GDP in 2017-18, as against 3.5% in 2016-17. “The better than feared deficit target and commitment to fiscal consolidation will keep hopes of a RBI rate cut alive,” the Citigroup report said adding “the budget reinforces our view of another 25 bps cut in repo rate”.

Source: Mint February 02, 2017 14:26 UTC