Thursday, February 11, 2016
A Nomura report has said that the Reserve Bank is likely to cut the repo rate by 25 basis points (bps) after the Budget, in its policy meeting in April. According to the Japanese brokerage firm, gross value added (GVA) growth has marginally undershot the RBI's 7.4 per cent projection in the financial year 2015-16, supporting the case for a rate cut. Commenting on the issue, a Nomura Official told the media, "In our baseline, we believe the RBI will cut the repo rate by 25 bps in the April policy meeting after the Budget. Beyond that, we expect the RBI to stay on hold and shift its focus to policy transmission." "We expect GDP (market prices) growth to pick up moderately to 7.8 per cent in FY17 (year ending March 2017) from 7.6 per cent in FY16, indicating a slow and steady upcycle," he added. As per reports, the factors that are likely to support growth recovery include low commodity prices, low inflation, wage hikes owing to the forthcoming 7th pay commission and a normal monsoon.