Raghuram Rajan likely to cut rates by 50 bps in Feb-April: Analysts

A rate cut by the Reserve Bank of India (RBI) Governor Raghuram Rajan is now seen as a given, some analysts say.

In its monetary policy review on Tuesday, the central bank left key rates unchanged but sounded hopeful of inflation stabilising next year allowing it room to cut rates.

Analysts say the debate in the market has now shifted to the extent of rate cuts. Some expect RBI to cut rates by 50 basis points (bps) at one stroke sometime in Feb-April.

"Since the RBI believes that its actions will have a powerful signaling impact on investment sentiment, the first cut may well be 50 bps," Deutsche Bank says in a note.

Deutsche, Citi expect 100 bps in rate cuts between February 2015 and March 2016.

One-year OIS down 67 bps since end of Sept.
 
(With inputs from Reuters)