• Overview – In a challenging market environment, macroeconomic and policy divergence – the ‘new normal’ – remains the critical foundation of our updated views and forecasts, with the US economy, USD and US rates leading the way higher. This will ev...
• RBI keeps repo rate unchanged at 7.75%, makes further action contingent on upcoming data
• We expect another 25bps inter-meeting cut in March on benign inflation, further fiscal consolidation
• We remain positive on IGBs; recommend short- and me...
Event – The Reserve Bank of India (RBI) delivered a 25bps rate cut today, cutting the repo rate to 7.75% and the reverse repo rate to 6.75%, before its scheduled policy meeting on 3 February. A significant slowdown in inflation momentum (December CP...
We expect a gradual GDP recovery in FY16; lower inflation to pave the way for 75bps of repo rate cuts
• Any deviation from the stated fiscal consolidation path would pose a risk to our current forecasts
• We expect most of the government’s recentl...
• We review the NDA government’s policy actions as it nears the end of its first six months
• The pace of decision-making has picked up, though ‘big-bang’ reforms are delayed
• ‘Silent’ reforms to improve the ease of doing business are importan...
Direction signal stays negative on weak demand for EM debt
• Allocations moved towards Brazil in August on Marina Silva, a catalyst for change; now Dilma fights back
• Brazil’s subsequent underperformance makes it cheap and positioning is not skew...
The RBI has intervened substantially in the FX market to absorb capital inflows and limit volatility
• Concerns are that excess INR liquidity will be created and the RBI will incur quasi-fiscal costs
• We estimate that the RBI can intervene c.USD ...
• FM is likely to meet the FY14 fiscal deficit target of 4.8% of GDP, project a FY15 deficit at 4.2%
• Spending cuts, higher non-tax revenues will allow adherence to the fiscal consolidation plan
• Gross borrowing likely to be c.INR 5.8-6.0tn; w...
• RBI unexpectedly hikes the repo rate to contain inflation; we expect another 50bps of hikes in Q3-FY14
• Despite our higher inflation forecasts, more easing of liquidity conditions is likely, including a 50bps reduction in the MSF
• We expect th...
Event – The Reserve Bank of India (RBI) surprised the market today by hiking the repo rate by 25bps to 7.50%. Although a reduction in the Marginal Standing Facility (MSF) rate by 75bps to 9.50%, and a marginal relaxation in the minimum daily mainte...
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