Maybe only 10% can see it well enough to vouch for a bigger CRR cut this morning but the news of Economic bottoming out and the data outlook from infation and IIP could well translate into a big Pre-March boost for the Economy tomorrow. Any boost in the rest of the Financial year is hardly likely to reach the Economic growth of the next very quarter and the RBI Governor has shown earlier that while he is brave enough to hold back if it is still opportune for only inflation led dinosaurs, he is equally brave in rewarding markets with better rates on such a cusp of expectations where the Economy is showing signs of upgrading itself and Credit has been strong and silent as a performer in the background without retail inflation crossing 10% in CPI terms. Also that would leave policy doves and hawks eager and attentive in the remaining three months including the call in February.
The discussions of a bottoming out however , especially in light of the findings presented in the Mid Term Review ( Chief Economic Adviser Raghuram Rajan is on rightnow). However the reduction in the CAD is not on account of Revenue targets ( which are likely lesser by ~20% of the ambitious Target to nr INR 3.1 T ) but from the Divestment Engine that has chugged along after NMDC’s successful completion the same week.
The Mid Term Review also mentions the Fisc is likely to go to 5.3% and the spectre of reduced subsidies is unlikely to engender further instability to the current regime. RBI is expected to go for a 50 BP CRR cut or more likely a 25 BP CRR cut according to the morning polls
- Macro-economic Report: RBI cuts FY13 GDP growth forecast to 5.7 … – Bloomberg UTV (yourmoneysite.com)
- SBP cuts policy rate to a single digit (thenewstribe.com)
- Credit Suisse lowers FY13 GDP forecast a notch to 5.9% (rediff.com)
- Bank Policy Tuesday: Rates unchanged, RBI targets FX exposure (awardz.wordpress.com)