 "Citi, Morgan Stanley expects 100 basis rate cut in 2012")
While the unexpected CRR cut was music to many an ear, investors would be pleased to know that most bankers and economists are expecting a 100 basis repo rate cut in 2012. Citi and Morgan Stanley, both, echoed similar sentiments.
“Citi expects that the RBI would cut repo rates by at least 100 basis points in 2012, It is currently at 8.5 percent, we expect it to be atleast 7.5 percent by the year end” said Rohini Malkani, chief economist, Citigroup in an exclusive interview to CNBC TV-18.
Even Chetan Ahya of Morgan Stanley, expects rate cuts from March-April 2012, as told to CNBC TV-18.
However, the budget will play a key role and the the RBI will want to wait till the budget, before embarking on rate cuts. While inflation continues to remain a concern for the RBI, it may wait to see if the government is taking a step towards fiscal consolidation - something that will be clear only in the budget.
Overall, Citi’s forecast for India’s GDP for the years ended March 2012 and March 2013 stood at 7 percent. Malkani also said that the government needs to take some tough reforms if growth is to be maintained even at the 7 percent levels.
Watch the CNBC-TV18 video below :
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