A big week for central bank meetings looms and the doves are likely to be in full flight.
Take the Reserve Bank of India, the arch-hawk of emerging markets. It meets on Tuesday and some, such as Goldman Sachs, are predicting a rate cut as a nod to the government’s reform efforts. That call is a rare one, yet it may have gained some traction after data last week showed inflation at a 10-month low, while growth languishes at the lowest in a decade. Goldman’s Tushar Poddar tells clients:
With both growth and inflation surprising on the downside relative to the RBI’s forecast, there is a reason for the central bank to move earlier than its previous guidance.
Most other analysts however reckon the RBI will judge it too soon to cut rates. It could opt instead for a cut in banks’ cash reserve ratio in order to prod them into loosening lending rates. A Reuters poll of analysts predicts a half point rate cut in the Jan-March 2013 period.
Over to Turkey where the central bank has been making dovish noises and actions (it has trimmed its overnight lending rate three times this year) . On Tuesday, it is expected to cut its main policy rate for the first time in over a year, thanks to falling inflation and last week’s data that showed the Turkish economy grew just 1.6 percent in the third quarter, compared to forecasts of 2.6 percent.