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Retail inflation rose to a four-month high of 2.57% in February, but stayed benign leading to calls for the RBI for lower interest rates.
Slower growth & benign inflation will boost chances of back-to-back interest rate cuts by RBI in April.
What's troubling the market - beyond the known $100 billion deficit for next fiscal - is the additional, below-the-radar govt funding it's being asked to provide.
Core inflation has remained sticky at around 6% and is a key reason economists cautioned against more rate cuts after last week’s surprise easing.
Govt officials were quick to praise the cut but economists are concerned that the monetary & fiscal stimulus would be inflationary.
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With no upswing in output growth and low consumer price inflation, the stage is set for cutting interest rates.
The bank is the latest to add its voice to a chorus of calls for monetary policy easing.
RBI Governor Shaktikanta Das is seen as more dovish on monetary policy.