HSBC delays India rate cut expectations to the fourth quarter

On July 16, Jinshi Data reported that HSBC has postponed its interest rate cut expectation for the Reserve Bank of India to the fourth quarter. Pranjul Bhandari, chief economist of HSBC India, said in a report that some prerequisites for interest rate cuts, such as fiscal consolidation and slowdown in unsecured loan growth, have been met, but there is still a prerequisite, which is the drop in food prices. Therefore, HSBC Bank expects the Reserve Bank of India to cut interest rates by 25 basis points in the fourth quarter and the first quarter of next year, and believes that given the strong momentum, the loose cycle will be shallow. HSBC Bank expects the government to set its fiscal deficit target at 4.9% of GDP, which is lower than the 5.1% announced in the mid-term budget. Against the backdrop of a declining fiscal deficit, net borrowing will be reduced by INR 500 billion (USD 5.98 billion) compared to the mid-term budget.