India: RBI Governor Das cuts and stays ahead of the pack – Commerzbank

Charlie Lay, analyst at Commerzbank, points out that the Reserve Bank of India (RBI) has cut rates as expected for the third consecutive meeting by 25bp to 5.75% and shifted to a dovish bias.

Key Quotes

“When Governor Das lowered rates in February this year, he was accused of succumbing to government pressures. However, just four month later, he is perceived to be well ahead of the curve after the Fed’s latest dovish pivot.”

“RBI noted downside risks to growth and with inflation still below the 4% mid-point target, we could yet see a further 75bp cut in the remaining three meetings this year.”

“On FX, RBI is likely to remain pragmatic and allow USD-INR to find its own level and drift higher from the current sub-70 level.”