India data raises hopes of rates cut
Source: Agencies |
January 15, 2013, Tuesday
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Print Edition
Print Edition
INDIA'S inflation softened to 7.2 percent in December as lower core inflation offset higher food prices, raising expectations the central bank will cut rates when it meets later this month.
India's economy is on track to grow at its slowest pace in a decade, but high inflation has made the bank wary of cutting rates to kick-start growth.
Core inflation, which excludes volatile food and energy prices, fell to 4.2 percent in December from 4.5 percent in November, according to the government figures released yesterday.
"Both the level of headline inflation and its direction is far more comforting that initially anticipated," said HDFC Bank economist Jyotinder Kaur. "The question is not whether the central bank will cut the repo rate at its next review on January 29 ... but the extent by which it will do so."
The inflation data helped send the Sensex stock index up nearly 1 percent and strengthened the rupee against the dollar.
India's economy is on track to grow at its slowest pace in a decade, but high inflation has made the bank wary of cutting rates to kick-start growth.
Core inflation, which excludes volatile food and energy prices, fell to 4.2 percent in December from 4.5 percent in November, according to the government figures released yesterday.
"Both the level of headline inflation and its direction is far more comforting that initially anticipated," said HDFC Bank economist Jyotinder Kaur. "The question is not whether the central bank will cut the repo rate at its next review on January 29 ... but the extent by which it will do so."
The inflation data helped send the Sensex stock index up nearly 1 percent and strengthened the rupee against the dollar.
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