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Sep 29, 2015
RBI: Surprise 50bp cut, supported by positive monsoon - BBH
FXStreet (Delhi) – Research Team at BBH, note that the RBI surprised markets with a 50 bp cut overnight to 6.75% against the markets expectation of a 25bp cut.
Key Quotes
“The statement cited the positive monsoon season as a factor in increasing the bank’s confidence that inflation is subsiding. The weakening growth picture domestically and abroad, as well as subdued commodity prices have also been taken into account.”
“Governor Rajan seems to be looking through the risk of inflation pass-through. The move is in line with our divergence view of global central banks, which (on the EM side) places LatAm central banks on the hawkish end, and Asian central banks on the dovish end.”
Key Quotes
“The statement cited the positive monsoon season as a factor in increasing the bank’s confidence that inflation is subsiding. The weakening growth picture domestically and abroad, as well as subdued commodity prices have also been taken into account.”
“Governor Rajan seems to be looking through the risk of inflation pass-through. The move is in line with our divergence view of global central banks, which (on the EM side) places LatAm central banks on the hawkish end, and Asian central banks on the dovish end.”