Apr 15, 2013
Forex Flash: India WPI supports RBI rate cut in May – TD Securities
FXstreet.com (Barcelona) - With the publication of a WPI in deceleration from 6.84% Y/Y in February to 5.96% in March, below the consensus expectations for 6.27%, TD Securities analysts observe that the trend has been for lower WPI in the last three years, mostly driven by the tight monetary policy and the sharp economic slowdown recently. “This means that WPI is now within the RBI’s unofficial ‘comfort zone’ of 4-6% and supports rate cuts at the next RBI meeting in May”, wrote analyst Jacqui Douglas. “However, inflation remains volatile and risks of resurgence remain, especially on bad weather conditions. Also, with CPI hovering above 10%, we think that RBI will hold a cautious stance”, Douglas added.