NO SURPRISE
The Reserve Bank of India cut the reverse repo and the repo rate by 100bp each. The cash reserve ratio was reduced to 5.0% from 5.5%, releasing INR 200 billion of incremental liquidity.
ANOTHER ROUND OF CUTS LOOKS LIKELY
Even the optimists expect the global economy to bottom only in H2 2009. Indian manufacturing will remain hostage to poor export performance. Inter-sectoral linkages will pull the services sector down. Expect further cuts.
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