OPINION: World moving to low rates

It is likely that RBI would cut rates by 40 basis points considering that CPI has stayed within the medium-term range of 4%. Inflation is expected to remain static, which will provide RBI the room to cut rates. The ECB has cut it deposit rates to a negative 0.5% and announced that it would purchase assets worth 20 billion euros from November. This is good news for India. 

When interest rates turn negative, foreign investors would be attracted to invest in Indian debt, considering that the 10-year government bond gives a return of 6.65% to 6.7%. The entire world is moving towards lower interest rates and India is no exception.

Ashutosh Khajuria, executive director, Federal Bank