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INDIA: Sell-Side Analysts Expect Shallow Rate Cutting Cycle to Begin in December

INDIA
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  • ANZ: Given the expected alignment of CPI inflation with the 4% target over FY26 and monetary policy lags of around three quarters, ANZ expect rate cuts to begin in December 2024. They see scope for three rate cuts in total, taking the terminal policy rate to 5.75% by April 2025.
  • DBS: Retain their view for rate cuts to start with a 25bp reduction in December 2024, assigning a 70% probability, with 100bp cuts over the course of CY2025.
  • Goldman Sachs: Continue to expect a shallow easing cycle of total 50bp rate cuts from the RBI, with 25bp each in the December 2024 and February 2025 meeting.
  • HSBC: Believe this will be a shallow rate cutting cycle, with an aggregate 50bp in easing. Expect a 25bp rate cut in December, followed by another one in February, taking the policy rate to 6%.
  • JP Morgan: If the RBI’s own forecast is seen to hold, JPM believe the central bank will cut in December. But much will depend on food prices and whether the strong monsoon translates into a strong harvest and exerts a disinflationary force on food prices in the coming months.
  • UOB: Factor in a 25bps rate cut in the December MPC with slight risks that the start of the easing cycle could be delayed to the February 2025 MPC. They project a relatively shallow easing cycle this round (total of 75bps cut), taking the terminal rate to 5.75% by 2Q25.
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  • ANZ: Given the expected alignment of CPI inflation with the 4% target over FY26 and monetary policy lags of around three quarters, ANZ expect rate cuts to begin in December 2024. They see scope for three rate cuts in total, taking the terminal policy rate to 5.75% by April 2025.
  • DBS: Retain their view for rate cuts to start with a 25bp reduction in December 2024, assigning a 70% probability, with 100bp cuts over the course of CY2025.
  • Goldman Sachs: Continue to expect a shallow easing cycle of total 50bp rate cuts from the RBI, with 25bp each in the December 2024 and February 2025 meeting.
  • HSBC: Believe this will be a shallow rate cutting cycle, with an aggregate 50bp in easing. Expect a 25bp rate cut in December, followed by another one in February, taking the policy rate to 6%.
  • JP Morgan: If the RBI’s own forecast is seen to hold, JPM believe the central bank will cut in December. But much will depend on food prices and whether the strong monsoon translates into a strong harvest and exerts a disinflationary force on food prices in the coming months.
  • UOB: Factor in a 25bps rate cut in the December MPC with slight risks that the start of the easing cycle could be delayed to the February 2025 MPC. They project a relatively shallow easing cycle this round (total of 75bps cut), taking the terminal rate to 5.75% by 2Q25.