RBI to shift its policy stance from accommodative to neutral - ING

Analysts at ING Bank believe that the Reserve Bank of India (RBI) is likely to shift stance from accommodative to neutral in the next policy even though the rate-setting panel may refrain from cutting rates this year.

Key Quotes:

“We consider 7% GDP growth a pre-requisite for the RBI to unwind some of its recent policy easing. That’s not on our forecasting horizon out to 2021. A shift in the policy stance to neutral from accommodative is a reasonable starting point for the central bank's next policy meeting in early February.”

“On the fiscal front, the policy will remain accommodative but a wider budget deficit over the next few years won’t leave much room for fiscal maneuvering to support growth.”