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.
Central banks across five continents are undertaking the broadest reduction in borrowing costs since 2009 to avert a global economic slump stemming from Europe’s sovereign-debt turmoil.
India’s one-year interest-rate swaps climbed after the central bank raised its benchmark rate and said inflation is set to quicken.
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.
"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