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India CPI Unexpectedly Eases, Boosting Chances of Rate Cut


  • India’s retail inflation unexpectedly slowed despite crop damage from unseasonal rains, boosting the possibility that central bank Governor Raghuram Rajan will cut rates outside the review cycle for a third time this year.
  • While India’s inflation has slowed from an average of 6.7 percent last year, its still the second-fastest in Asia after after Indonesia.
  • Agriculture Minister Radha Mohan Singh said, unseasonal rains and hailstorms this year damaged crops including wheat, rapeseed and gram in 11.3 million hectares.
  • According to the monetary authority’s forecasting model, consumer price gains will moderate to 4 percent by August due to base effects before firming up to 5.8 percent by March 2016.
  • He added the upside risks including a weak monsoon and a surge in food prices appear offset by global disinflationary tendencies and slack in the domestic economy.

Source: Bloomberg

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