India: More rate cuts likely by the MPC - Standard Chartered

Analysts at Standard Chartered forecast another 40bps reduction in the repo rate to 4.75% by FY21 as India's MPC remains focused on growth. 

Key quotes

"We expect a 15bps repo rate cut at the December meeting as the MPC tries to balance a sharper-than-expected growth slowdown and a temporary inflation spike near-term."

"This is likely to reflect in another downward revision of the MPC’s FY20 growth projection and an upward adjustment in its inflation forecast in December."

"While we expect a dovish stance to be maintained, indicating more cuts ahead, the MPC is likely to pause temporarily after December as it assesses the improvement in economic activity in H2-FY20 and the transmission of 135bps of rate cuts delivered to date, as the recent improvement in global sentiment gives it room for a pause."