CRISIL hopes for rate cut

Falling core inflation on the back of slowing economic growth is likely to create space for RBI to ease monetary policy in the early part of the next year, rating agency CRISIL said on Thursday.

“With GDP growth slowing sharply over the past few quarters and industrial output at standstill in H1, core inflation is likely to decline further over the coming months. This will create space for monetary policy easing by RBI in early 2013,” CRISIL said in a report.

Wholesale price index-based inflation declined to 7.45 per cent in October from 7.8 per cent in the previous month.

Core inflation, declined to 5.2 per cent in October from 5.8 per cent in August due to slowing demand-side pressures.

“The decline in core inflation was in line with our expectation,” the report said, adding that relative appreciation in the rupee against the US dollar lifted some pressure off the imported component of core inflation. Referring to past trend of core inflation, the report said it had risen in the last few months due to a fall in the rupee’s value.

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