EM Country Briefing: India - RBI rewards reforms with a token CRR cut
September 17, 2012
India: RBI rewards reforms with a token CRR cut
The Reserve Bank of India (RBI) left the repo rate unchanged at 8% as widely expected but gave a token cut in the cash reserve ratio (CRR) by 25bp to 4.50%. The statement was neutral-to-dovish with a bias for lower rates dependent on 1) a drop in inflation and 2) more importantly, continued progress on structural reforms to raise efficiency and reduce the fiscal deficit. We look for a 25-50bp cut at the next meeting on 30 October. USD-INR has scope to ease to 52.00 by year-end if reforms persist.
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