Rate cut ahead

With core inflation down to 3.8%, the first sub-4% number in just under 3 years, it’s a near-certainty that RBI will cut the repo rate 25 bps on Tuesday, and perhaps by a similar amount later in the year in a bid to stimulate growth now that inflation looks under control. There is none of the usual base effects—February 2012 WPI was higher than that of January 2012—and inflation is very clearly trending down.

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