NEW DELHI: US investment banking company Goldman Sachs’ Chief India Economist Santanu Sengupta said on Tuesday that the Reserve Bank of India is expected to maintain current rates and take a dovish approach in the current monetary policy committee, with potential cuts in December, if conditions permit.
Investors await the Reserve Bank of India’s monetary policy decision on Wednesday, in hopes for a potential lending rate cut.
Sengupta said that the RBI’s stance will be impacted by the uncertain trade policy and external headwinds, despite a strong domestic growth outlook.
Sengupta anticipates a 25-basis-point rate cut in December, provided growth and inflation readings support it, according to multiple reports.
He said that a rate cut is likely in December, citing stable domestic growth but external challenges such as US tariffs and H-1B visa restrictions affecting sentiment.
He said that GST reductions will initiate a "mass consumption revival" starting in the October–December quarter when "the consumption growth will be felt."
If you are an FII investor looking at India, then you have tariffs and H1B, leading to outflows, which is the real headwind India is facing, he added.