HSBC is now opting to upgrade our long-held 2009/10 GDP growth forecast to 7.2% from 6.2%, while leaving the 2010/11 projection at 8.5%. The key to the change is what can only be described as a remarkable July-September GDP release. Our calculations suggest that total output rose 3.3% (13.9% annualised) in
quarter-on-quarter seasonally adjusted terms – the biggest quarterly rise the economy has enjoyed since the data began in 1996! The 7.9% y-o-y rise compared with a market expectation of a 6.3% increase and was the strongest since January-March 2008.
RBI's Policy Expectations by HSBC
HSBC has decided to stick with the view that the first Cash Reserve Ratio hike (of 50bps) will come at the 27 January policy meeting, followed by
25bp hikes in the repo and reverse repo rates in March. In 2010 as a whole, expect the CRR to be raised by 200bps and the repo and reverse repo by 125bps
