‘There’s still room for rate cuts... inflation is headed lower’
This article was published 3 weeks back: By Saikat Das, ET BureauLast Updated: Sep 29, 2020, 08:44 AM IST
Synopsis : Country treasurer at Bank of America Jayesh Mehta expects at least 50 bps drop in benchmark yields, 25 bps cut in repo rate
Mumbai: Inflation is expected to trend lower toward the last quarter of the financial year, boosting the likelihood of a calibrated resumption in rate easing by the central bank, country treasurer at Bank of America Jayesh Mehta told ET.
Higher inflation is a temporary phenomenon, caused by supply-side disruptions due to the pandemic. “There is still some room for rate cuts despite the fact that there might be some temporary disruptions due to higher food and fuel inflation,” said Mehta. Inflation is headed lower in the first and second quarters of 2021, Mehta said.
He said he would expect at least a 50-basis point drop in benchmark yields and 25-basis point cut in the repo rate.
“A lower interest rate is crucial for growth and will help people survive in the aftermath of the pandemic,” he said.
The market expects the Reserve Bank of India (RBI) to come out with some sort of a rationale for its policy decisions to comfort the market participants that are otherwise making their own interpretations.
“In these uncertain times, it’s best for the RBI to provide clarity,” Mehta said. “If we do not see some support from the RBI ahead of the policy meeting, then yields may start inching up.”
https://economictimes.indiatimes.co...tion-is-headed-lower/articleshow/78373017.cms
