All eyes are on the Reserve Bank of India (RBI) policy decision in a few hours from now. Jahangir Aziz, head of emerging markets economic research at JPMorgan, shared his views and expectations from the policy.

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“My guess is that even though the Monetary Policy Committee (MPC) will talk about the concerns about liquidity, concerns about sovereignty, there isn’t very much that it can do. All it can do is to cut rates and our sense is that they will cut rates,” Aziz said on Thursday.

Talking about the housing finance companies (HFCs), Aziz said, “I think some efforts will be done to increase the liquidity in the market but I don’t think there is any kind of permanent liquidity injections through cash reserve ratio (CRR) cut etc, I don’t think that is on the cards. In an insolvency case we can put Band-Aids by putting in more liquidity. At the end of the day, it is an insolvency case and the government has to step in not just for this case but also in general for most of the non-banking financial companies (NBFCs) problems.”

“We directly do not know, which direction dollar will go. If the dollar strengthens in this risk-off environment, I think there will be significant pressures on all emerging market countries including India,” said Aziz.

On the quantum of rate cut by the RBI, he said, “I don’t think it will go beyond 25.”