RBI Signals Inflation Needs to Ease to Boost Rate-Cut Scope

Indian monetary policy may have space in future to support growth if price pressures ease and fiscal and trade deficits narrow, even as caution is needed for now to focus on inflation, the nation’s central bank said.

“Monetary policy needs to be cautious in the interim, focusing on inflation while using the available space to support growth to the degree it can,” the Reserve Bank of India said in a report yesterday ahead of its interest-rate decision in Mumbai today. If threats from inflation and the deficits recede further, that “could yield space down the line for monetary policy to respond to growth concerns,” it said.