Reserve Bank of India Likely to Cut Rates

  • Tuesday, February 7, 2017

The Reserve Bank of India is likely to cut rates by 25bps on February 8.

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On the heels of the demonitization effort in late 2016, many RBI watchers expected a rate cut at the December meeting. RBI policymakers held firm instead. Since that time, growth has continued to decelerate, business surveys have shown declining confidence, inflation has fallen, and the bank’s tone has taken a dovish* turn. In short, nearly all signs are pointing to a rate cut.

The Prattle Team

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Prattle Scoring System_Residuals_cropped

* Prattle’s models are based on the historical relationship between central bank language and market reaction, which is used as the basis of evaluation for future communications. The scores are normalized around zero and range between -2 and 2, negative numbers indicating dovishness and positive numbers indicating hawkishness. Aggregate trend is the overall sentiment of the bank calculated using a LOESS fitting of trend using a 12-month window.

Disclaimer: the forecasts provided herein are based upon sources believed by Prattle Analytics, LLC D/B/A Prattle, to be reliable and to be developed from models which are generally accepted as methods for producing economic forecasts.

Prattle cannot guarantee the accuracy or completeness of the information upon which this Report and such forecasts are based. This Report does not purport to disclose any risks or benefits of entering into particular transactions and should not be construed as advice with regard to any specific investment or instance. The opinions and judgments expressed within this Report made as of this date are subject to change without notice.

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