RBI to stay on hold even after disappointing GDP data: Nomura

The Reserve Bank of India (RBI) is likely to stay on hold in its policy review meet in October and instead focus on banking resolution and liquidity management, despite ‘disappointing’ June quarter gross domestic product (GDP) data, Nomura said in a report. From the RBI’s perspective, the GDP data was disappointing, but the current slowdown was largely due to the goods and services tax (GST), which should be seen as transitory, the Japanese financial services major said, adding the cashintensive sectors such as trade, transportation and construction were rebounding. The report said the turnaround in private services suggests the growth cycle will head higher once the GST effects fade. “We expect the RBI to continue to expect better growth prospects in the coming quarters,” Nomura said.