India’s central bank is expected to keep interest rates unchanged for the second time in six weeks on Tuesday, with Governor Raghuram Rajan expected to strike a hawkish tone on inflation that is easing but remains high.
Investors are worried that rates will stay high for longer after a Reserve Bank of India (RBI) panel last week proposed revamping the way monetary policy is made, including using consumer prices as a benchmark for targeting inflation.
The consumer price index (CPI) eased to a three-month low of 9.87 percent but remains well above the central bank’s policy repo rate of 7.75 percent. The wholesale price index, long the RBI’s main price barometer, slowed to 6.16 percent in December.
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