RBI should keep rates on hold – BBH

Analysts at BBH expects the Reserve Bank of India to keep rates on hold at its meeting later in the week. At the same time, analysts gave their view on another upcoming EM CB meetings later in the week.

Key Quotes

“Reserve Bank of India meets Wednesday and is expected to keep all rates steady.  CPI rose 5.2% y/y in December, which is in the upper end of the 2-6% target range.  The RBI has signaled no further easing, and this will likely be reinforced by the government’s expansionary fiscal policy planned for FY2018/19”.

“National Bank of Poland meets Wednesday and is expected to keep rates steady at 1.5%.  CPI rose 2.1% y/y in December, which is in the bottom half of the 1.5-3.5% target range.  The bank continues to signal no rate hikes this year, which will likely be tested by the robust economy and rising wage pressures”.

“Brazil’s COPOM meets Wednesday and is expected to cut rates 25 bp to 6.75%.  Brazil reports January IPCA inflation Thursday, which is expected to rise 2.99% y/y vs. 2.95% in December.  With inflation pressures rising, this should be the last cut in the cycle.  December retail sales will be reported Friday”.

“Peru central bank meets Thursday and is expected to keep rates steady at 3.0%.  January CPI rose 1.3% y/y, which was the lowest since May 2010 and near the bottom of the 1-3% target range.  Still, the bank has been cutting rates every other meeting during this easing cycle.  Since it just cut rates in January, the bank seems likely to stand pat this month and then cut again in March”.