India’s Inflation Breaches Target, Reducing Room for Rate Cuts

India’s inflation accelerated more than estimated, narrowing room for monetary easing as investors wait to see who will replace hawkish central bank Governor Raghuram Rajan next month.

An acceleration in Asia’s second fastest inflation makes it harder for the incoming governor to retain Rajan’s "accommodative" monetary stance without stoking prices further. Rajan, whose term ends on Sept. 4, this week kept the benchmark repurchase rate at a five-year low of 6.5 percent and flagged upward risks to his consumer-price target of 5 percent by March 2017.