RBI's latest rate cut on expected lines: Gaurav Kapur, RBS

In a chat with ET Now, Gaurav Kapur, RBS, shares his views on the RBI's latest rate cut. Excerpts:

ET Now: Are you surprised by the timing of this rate cut or the quantum of the cut?

Gaurav Kapur: I was expecting a rate cut before the policy, perhaps after the inflation numbers due next week. So, I am not entirely surprised.

I would say this is a positive surprise, considering that they did not wait even for the incoming data. It clearly seems to suggest that the RBI is fairly comfortable with the inflation — both headline and core — scenario.

The outlook on inflation is benign for the coming years. It seems that the RBI would comfortably be working around the 6% mark by January 2016. Inflation is most likely to remain in the vicinity of about 4.5% for about five quarters throughout 2016.

Even the latest Economic Survey made a case for a rate cut. With the Budget keeping room for easier monetary policy by continuing on the path of fiscal consolidation, by and large a rate cut was expected.

I was only waiting for it to happen. I was expecting a pre-policy rate cut anyway.