Inflation Drop Unlikely to Sway India's Hawkish Central Bank
- RBI expected to await impact of GST, monsoon before acting
- Central bank keen to burnish inflation-fighting credentials
This article is for subscribers only.
A drop in India’s consumer price index to a record low is unlikely to impress a central bank that’s bracing for a pick up in growth and keen to burnish its inflation-fighting credentials.
Investors have cheered a near one percentage-point drop in the index, driving down sovereign bond yields by 7 basis points since the data was released on May 12. One-year swap rates have also fallen by more than three basis points amid expectations the Reserve Bank of India could adopt a less hawkish stance as early as its June 7 announcement.