December inflation seen up slightly, rate cut still expected

Jan 14 2013, 10:22 IST
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Reserve Bank of India had projected December inflation of around 8 percent in its October policy review. (Reuters) Reserve Bank of India had projected December inflation of around 8 percent in its October policy review. (Reuters)
SummaryReserve Bank of India had projected December inflation of around 8 percent in its October policy review.

passenger fares and subsidised fuel prices to reach its fiscal deficit target of 5.3 percent of GDP.

Asia's third-largest economy is likely to post its slowest growth in a decade this fiscal year after investment sentiment was hit by sluggish policymaking, a swelling fiscal deficit, high inflation and elevated interest rates. India is likely to post a growth of 5.5-5.6 percent in 2012/13.

Industrial output contracted 0.1 percent in November on weak capital goods production and muted consumer demand.The RBI, in recent years one of the most hawkish central banks globally, was unable to shift its policy stance towards growth until December due to stubborn inflation, even as its peers in China, Brazil and South Korea became more aggressive on policy easing to support growth.

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