India seen cutting interest rates again as growth stumbles
MUMBAI (REUTERS) - India's central bank is expected to cut its key policy rate on Tuesday for the second time this year to help revive a faltering economy, taking comfort from moderating core price pressures and the government's commitment to trim the fiscal deficit.
The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points to 7.75 per cent in January after holding it steady for nine months, and a recent Reuters poll forecast a further 25 bps cut.
However, a recent uptick in headline wholesale inflation, rising food price-driven consumer inflation and a record-high current account deficit are seen limiting the RBI's space for more aggressive monetary easing.
Central bank watchers expect Governor Duvvuri Subbarao to maintain a guarded stance on future rate cuts.