Friday 26 December 2008


INDIAN INFLATION EASES TO NINE-MONTH LOW ON OIL COSTS

Kartik Goyal

Bloomberg, December 26, 2008

India’s inflation slowed to a nine- month low, giving the central bank room to cut interest rates further to support a faltering economy.

Wholesale prices increased 6.61 percent in the week to Dec. 13 from a year earlier after gaining 6.84 percent the previous week, the commerce ministry said in New Delhi today. That matched the median estimate of 17 economists surveyed by Bloomberg News.

Inflation in India has fallen below the central bank’s 7 percent fiscal year-end target amid lower fuel costs. Easing prices may allow central bank Governor Duvvuri Subbarao to cut interest rates for the fourth time in two months and implement the “aggressive monetary policy” the finance ministry says the country needs to support growth.

“The declining inflation trend will continue and that gives the Reserve Bank of India enough legroom to cut borrowing costs,” said Prasanna Ananthasubramaniam, an analyst in Mumbai at ICICI Securities Ltd. “A further cut in rates will help minimize the downside risks to growth and restore confidence in the markets.”

Bonds rose after the inflation report. The yield on the 8.24 percent note due April 2018 fell one basis point to 5.55 percent in Mumbai.

Inflation is likely to slow to 5 percent by the end of March, Arvind Virmani, the finance ministry’s top economist, said this week.

(...) [artículo aquí]

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