Sorry! rate cut won't help India: JP Morgan

The Indian economy today is more integrated with the global economy, JP Morgan said today, noting that the impact of the rupee's fall on exports has a broader impact.

The depreciation in both nominal and effective terms of the rupee has already resulted in a "substantial" loosening of monetary conditions in India, the brokerage said today.

The bank estimates the 10 percent depreciation of the rupee in nominal (NEER) terms over the past three months is equivalent to 100 basis points of rate cuts, calling it "something that should bring pause to those who still believe substantial rate cuts are warranted."

[caption id="attachment_332597" align="alignleft" width="380" caption="The Indian economy is more integrated with the global economy, and the impact of the rupee's falls has a broader impact. Reuters"][/caption]

The bank added that easing monetary policy would not necessarily lead to faster growth, saying the "elevated" macro-economic and regulatory uncertainty, as well as supply constraints, are "far more" responsible for the investment slowdown.

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"Policymakers may be well served to focus on these areas rather than undertake substantial monetary easing in light of the events of the last 3 months," JPMorgan said .

Reuters