Expect RBI to cut rates by March next year: Ananth Narayan, StanChart Bank

In a chat with ET Now, Ananth Narayan, Co-Head of Wholesale Banking, South Asia, Standard Chartered Bank, shares his views on the RBI credit policy. Excerpts:

ET Now: The direction sense clearly seems to be that if not in this policy, in the next policy we should brace ourselves for some reduction.

Ananth Narayan: Absolutely. The governor has gone pretty much to the script. He has acknowledged the fact that the inflation numbers are looking a lot better now, since the last policy of 30th September. Jan 2016 now is centred around 6% with more balanced risk as opposed to the earlier 7% with upside risks.

Clearly, lower commodity prices, particularly those of energy and food, have had brought down inflation. As a base case, clearly with the current levels and the current projections, a bit of easing is warranted. There is room to ease.

The governor is doing the right thing by ensuring that this is a little more sustained before actually embarking on the easing. But it does look like by March of next year, the RBI will embark on rate cuts and they will do it for a series of actions. They probably want to wait for the budget. Post the budget he may embark on rate cuts, maybe even a 50 bps rate cut. Overall between January and the end of fiscal 2016, a 100 bps of rate cut is possible.