Bangalore: India’s inflation has come off a peak but is still high, Bloomberg quoted the central bank governor as saying, a comment that is likely to cool expectations for a rate cut later this month.
“When growth is slowing down you can stimulate the economy either by monetary easing or by fiscal stimulus, but both monetary and fiscal side have no room for stimulus. So that is the big concern,” Reserve Bank of India (RBI) governor D. Subbarao told management students in the northern city of Lucknow on Tuesday, the news agency said.
Expectations for a rate cut had gathered momentum this week after headline inflation slowed to its lowest level in three years.
The central bank, which is scheduled to review policy on 29 January, has kept its key borrowing rate at 8% since April, defying calls from business and politicians to do more to cushion the economy from a downturn that has dragged it towards its slowest growth rate in a decade. Reuters