ICICI Securities Primary Dealership Limited is not expecting any rate cuts by the Reserve Bank of India (RBI) anytime soon, said A Prasanna, chief economist at I-Sec PD.
However, he expects the new RBI governor Shaktikanta Das to change the stance to neutral. The government on Tuesday appointed former finance secretary Shaktikanta Das as the new governor of RBI after Urjit Patel resigned abruptly on Monday.
“At this point of time we do not expect a rate cut, I mean the composition of inflation is not so comforting and also we think that the Monetary Policy Committee (MPC) would prefer to wait and see what indication or guidance the Fed gives and also oil prices continue to be volatile. So there are too many moving parts to take that call now,” he said.
The government on Wednesday announced key macroeconomic numbers with Index of Industrial Production (IIP) in October hitting its highest level in 11 months and retail inflation dropping to its lowest level in 15 months in November.
On IIP front, Prasanna said, “At this point this is not going to make us change our view, the economy is anyways slowing in the second half of this financial year but this is an important matrix to track in the sense that if growth surprise on the upside then also should factor into the MPC’s calculation and if they are also thinking about rate action maybe that could delay potential rate action.”