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The Reserve Bank may go for a “tokan cut” in interest rates in its upcoming policy review on February 3, a report by banking major SBI said today.
“We continue to maintain that the first rate cut could happen any time after the Budget, though the probability of a token cut on February 3 may have increased. We are pencilling in a 75 basis point rate cut in 2015,” SBI Chief Economist Saumya Kanti Ghosh said here today in a report titled ‘Triple Macro Bonanza’
The report said that 5 per cent consumer price index-based inflation and 0.1 per cent WPI prints in December are a positive surprise, leading to a strong possibility of March retail inflation coming in at 5.5 per cent, which is lower than the 6 per cent mean inflation target set by the RBI.
Ghosh said that he has based his belief on lower inflation to the SBI’s Corporate Pricing Power Index which is at a five-year low now, while the SBI Pass-through Index is at a 5.5-year low.
“With global commodity and oil prices continuing to be benign, it is understood that the pass-through index could head even lower in the coming days. This will have a positive impact on SBI corporate pricing power index, and hence the entrenched disinflationary impetus should continue,” he said in the report.
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