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
* 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.
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