The Reserve Bank of India will definitely shift its stance from "calibrated tightening" to neutral in the next policy, said B Prasanna, head-global markets group at ICICI Bank.
“The RBI rate stance which was at a calibrated tightening stance in the December policy would definitely shift to neutral stance is what we expect and then followed up with a possibility of a rate cut sometime in the April to July period. Therefore, our base case is for a stance change with a neutral policy for a longish period of time," he said.
According to him, fiscal deficit at worst will be 3.5 percent for FY19.
On rising fear of global economy slowdown, he said that the global growth scare is not limited to the US market but also evident in Chinese Purchasing Managers’ Index (PMI).
“Interesting thing happening in the US market is that the 2 year yields are also now falling substantially with the curve actually having a bull steepening kind of an effect. Therefore, that clearly means that the expectations of rate cuts are starting to feed into the market as far as Fed is concerned,” Prasanna added.