SINGAPORE: The Reserve Bank of India may go for rate cuts in December as well as next year as a modest rise in recent inflation is outweighed by downside risks to the central bank's growth estimates, according to a report.
The RBI minutes from October policy review underscored the monetary policy committee members' unanimous decision to keep rates lower for as long as necessary, the report by DBS Bank said.
"In our view, a modest overshoot in recent inflation outruns is outweighed by downside risks to RBI's growth estimates, keeping the door open for rate cuts in December and into 2020," said the bank.
It also observed that the tussle between fiscal worries and a dovish RBI continues to dictate rupee bonds. These concerns are compounded by a weaker run-rate of nominal GDP, pressuring the fiscal math.
As a counter, efforts to expedite receipts from divestment are underway, it noted. Apart from ETFs and IPOs to raise funds, the stake sale pipeline consists of two oil majors, an electricals firm, Air India, minority stakes in commodity names, among others.