RBI's September rate cut likely reduced odds of further easing in Q4

With India's Finance Minister Jaitley stating on 21 September that he wanted "rates to come down", the RBI was expected to cut rates by 25bps on 29 September. As it turned out, RBI cut rates by a more aggressive 50bps, taking the policy repo rate to 6.75%.

Alongside the rate cut, RBI cut its growth forecast for the fiscal year from 7.6% to 7.4% and set a new inflation target of around 5% by March 2017. With the government constrained by its fiscal targets, the onus was on the RBI to do the heavy lifting and this preemptive policy action was impressive, which places the RBI ahead of the curve. 

"The RBI will maintain an accommodative stance, but the front loaded rate cut in September has reduced the odds of further easing in the next 1-3 months", says RBC capital markets.