Financial markets and borrowers rooting for the Reserve Bank of India to ease policy this year could be in for a disappointment - in stark contrast to 2015 when it lopped 125 basis points off the repo rate.
If emerging markets are to lead global economic performance one again as they did in recent years, an important foundation will be to convince as many people as possible that reported growth data are as accurate as they can possibly be.
For all its single-minded focus on lowering inflation, India's central bank may be forced to acknowledge slowing growth in Asia's third largest economy by cutting interest rates -- probably faster than it expected.
For all the measures India's central bank has taken to increase transparency in policy making, predicting rate moves by Governor Raghuram Rajan is still difficult.
from India Insight:
By Sankalp Phartiyal and Ankush Arora
The benchmark BSE Sensex fell in three of five sessions this week, as higher crude prices hurt sentiment and the cabinet’s decision to delay a hike in gas prices disappointed investors. Caution also prevailed ahead of the June derivatives’ expiry on Thursday and fears of more violence in Iraq prompted investors to pare positions.
Indian stocks have rallied sharply over the last two months, soaring to record highs, although the bull run that began with expectations that Narendra Modi will become the country's next Prime Minister may soon run out of road.