The gold rout may narrow India’s record current-account deficit, easing pressure on the rupee, damping inflation and boosting scope for a further reduction in interest rates.
India’s persistently high inflation may prevent an imminent reversal of record interest-rate increases, as a weakening rupee and oil’s rebound reduce the scope for monetary easing, the central bank’s deputy chief said.
India’s industrial production rebounded from the worst month since March 2009, a sign consumer demand is withstanding record interest-rate increases.
Siddhartha Sanyal , chief India economist at Barclays Bank Plc’s investment banking division, comments on the outlook for the nation’s economy and central bank monetary policy.
India’s one-year interest-rate swaps climbed after the central bank raised its benchmark rate and said inflation is set to quicken.
India’s 10-year bonds advanced for a third day after the central bank said it will take steps as required to ensure adequate cash supply in the financial system.
India’s rupee dropped for a second day after data showed the current-account deficit widened and as concern about the global economic outlook curbed demand for emerging-market assets.
"While we do not expect the RBI to drop its guard against long-term inflation pressures, we think the RBI will find it difficult to ignore the large easing in inflation momentum and is likely to tone down its hitherto hawkish policy rhetoric."
- Siddhartha Sanyal on Nov 27, 2014