India’s central bank is expected to cut interest rates this week for the first time in nine months in response to the government’s recent economic reform spree and slowing inflation, economists say.
With inflation at a three-year low and a flurry of new measures to ease investment rules, now is seen as the right time for the bank to focus on pulling the economy out of its worst growth slump in a decade.
Policymakers are “clearly teed up for rate cuts,” banking on a further easing of inflation in coming quarters, lower government borrowing and more pro-market reforms, HSBC economist Leif Eskesen said.
However, those hoping the Reserve Bank of India will announce a big cut following its policy-setting meeting on Tuesday are likely to be disappointed.
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