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India’s Central Bank May Start Cutting Rates by March, IDBI Says

Aneesh Srivastava, who oversees 23 billion rupees ($435 million) as Mumbai-based chief investment officer at IDBI Federal Life Insurance Co., comments on Reserve Bank of India’s monetary policy.

The central bank left borrowing costs unchanged for the first time in eight meetings as inflation cools and the fallout from Europe’s debt crisis threatens growth.

The BSE India Sensitive Index (SENSEX) gained 1.2 percent to 16,018.07 at 1:36 p.m. in Mumbai, its first gain in three days.

Srivastava spoke in a phone interview.

On central bank action:

“The pause was expected as there is incremental pressure on economic growth. While domestic macros -- investment and consumption -- have been decelerating, the slowdown in global markets is impacting exports.”

“The central bank may start cutting interest rates by March. We don’t think it will want to wait for inflation to fall below 7 percent to initiate rate cuts.”

India’s benchmark wholesale-price inflation slowed to a one-year low of 9.11 percent in November.

On stock markets:

“We don’t expect to see a runaway rally. Markets will watch India’s macro-economic environment and focus on news flowing out of global markets.”

To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net;

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.

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