India: RBI cuts repo rate to 5.75% - ANZ

ANZ analysts points out that the Reserve Bank of India has cut its policy repo rate by 25bps today in its monetary policy review as per expectations.

Key Quotes

“On today’s policy review, we had expected (1) a 25bp reduction in the policy repo rate, (2) a shift in the policy stance from ‘neutral’ to ‘accommodative’ and (3) an acknowledgement that the output gap is widening. The Reserve Bank of India (RBI) obliged on each of these expectations.”

“Against this backdrop, alongside an emphasis that higher food prices are likely to be offset by easing core inflation as well as the weak performance of growth indicators, we are now building in significant easing.”

“We forecast three further cuts of 25bps each over the next six months.”