Potential Fed rate hike in December the constraint to easing. Better current account data, contained inflation and a recovering currency have provided BI with the previously elusive opportunity to shift its focus to growth and use monetary policy to stimulate a weak economy. However, although the domestic macro parameters have become more conducive for a rate cut at this juncture, the immediate driver, however, would be the timing of the Fed rate hike. 

When the December hike was looking quite iffy, there was an increased probability of a rate cut (from the current level of 7.5%) given the window of opportunity available. However, with the latest US NFP data turning hugely favourable and a December rate hike now commanding a higher probability, it is believed that BI will be forced to remain on hold for the time being. 

A rate cut at this juncture could lead to elevated depreciation pressure on the currency in case the Fed hike materialises. As expected, BI remained on hold during its November meeting and it is believed that it would be prudent to remain on hold and allow the dust to settle post the rate hike. 

"We expect the next easing move to take place during Q1 2016", notes Societe Generale.