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Thursday, April 8, 2010

Feb industrial output seen up 16 pc y/y

Industrial output to rise 16 percent in February from a year earlier, the median forecast in a poll of 20 economists shows. That is marginally lower than an annual rise of 16.7 percent in January.

Forecasts ranged from a rise of 12 percent to 17.5 percent.

FACTORS TO WATCH: Manufacturing should continue to drive output growth, helped by consumer durables and capital goods sectors on government stimulus spending and buoyant consumer demand.

Revival in exports since last November is also expected to underpin growth momentum.

MARKET IMPACT: A robust data would reinforce confidence in the strength of the recovery. The economy is expected to grow 8.5 percent in 2010/11 that began on April 1.

However, a substantially stronger-than-expected data will fuel expectations for a 50-basis-point hike in policy rates when the central bank reviews policy on April 20 and federal bond yields could retest 8 percent levels.

The 10-year benchmark bond yield had hit 8.03 percent, its highest in more than 17 months, on March 22 after the central bank unexpectedly raised its key rates by a quarter of a percentage point citing rising inflation pressures. It has since eased to around 7.78 percent.

Markets have already priced in a rate hike of at least 25 basis points in April.

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