India's headline inflation slowed to the lowest rate in more than three years in March, hardening expectations that the central bank will cut policy interest rates next month to help the economy recover from its slowest growth in a decade.
The encouraging inflation data was released as finance minister P Chidambaram was set to begin a series of roadshows in North America aimed a drawing billions of dollars of investment. Foreign investment inflows are needed to help fund a gaping current account deficit that has emerged as a worrying faultline in Asia's third largest economy.
Wholesale prices, India's key inflation measure, cooled to 5.96 per cent in March after an annual uptick to 6.84 per cent in February, the lowest rate since November 2009 and less than forecast by a Reuters' poll of economists.
"Odds for a rate cut in May have risen after today's numbers," said Radhika Rao, an economist with DBS in Singapore.
"The RBI will be in a tough spot as the recent deterioration in the current account position warrants rates to be left high to cool the economy, though the softer inflation numbers provide a window to ease with an eye on supporting the faltering growth outlook," Mr Rao said.
Wholesale inflation has trended downwards from 8 per cent in September.
A Reuters snap survey of analysts, made after the release of the official data, showed closely watched core inflation, which strips out volatile food and fuel prices, slowed to around 3.5 per cent in March, the slowest rate in more than three years.
The lower-than-expected headline inflation briefly buoyed the stock and bond prices as investors read it as a sign the central bank was more likely to cut rates when it next reviews policy on May 3.
The markets' gains, however, were shortlived as investors reacted to an upward revision to January inflation to 7.31 per cent from 6.62 per cent.
The benchmark 30-share index immediately extended gains to stand up 0.5 per cent from 0.3 per cent before the data was released, but fell back on the January revision.
India's benchmark 10-year bond yield initially dropped 3 basis points to 7.82 per cent on the March inflation data, but the revision to January prompted investors to trim their positions.
The central bank has made two 25 basis point rates cuts this year in response to cooling inflation, but is concerned that if it lowers rates too much it might undermine the rupee.
The current account deficit leapt to an all-time high of 6.7 per cent of GDP in the December quarter.
A high current account deficit is potentially inflationary because it can lead to a weaker currency and more expensive imports.
Some economists believe India could also benefit from inflows of funds unleashed by a mega-monetary easing in Japan earlier this month.
* Reuters
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Company%20profile
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
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- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
UAE currency: the story behind the money in your pockets
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Schedule for show courts
Centre Court - from 4pm UAE time
Johanna Konta (6) v Donna Vekic
Andy Murray (1) v Dustin Brown
Rafael Nadal (4) v Donald Young
Court 1 - from 4pm UAE time
Kei Nishikori (9) v Sergiy Stakhovsky
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Titan Sports Academy:
Programmes: Judo, wrestling, kick-boxing, muay thai, taekwondo and various summer camps
Location: Inside Abu Dhabi City Golf Club, Al Mushrif, Abu Dhabi, UAE
Telephone: 971 50 220 0326
Abu Dhabi World Pro 2019 remaining schedule:
Wednesday April 24: Abu Dhabi World Professional Jiu-Jitsu Championship, 11am-6pm
Thursday April 25: Abu Dhabi World Professional Jiu-Jitsu Championship, 11am-5pm
Friday April 26: Finals, 3-6pm
Saturday April 27: Awards ceremony, 4pm and 8pm
Jawan
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EXPATS
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Our legal columnist
Name: Yousef Al Bahar
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Walls
Louis Tomlinson
3 out of 5 stars
(Syco Music/Arista Records)
Arrogate's winning run
1. Maiden Special Weight, Santa Anita Park, June 5, 2016
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6. Pegasus World Cup, Gulfstream Park, January 28, 2017
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TICKETS
Tickets start at Dh100 for adults, while children can enter free on the opening day. For more information, visit www.mubadalawtc.com.
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T20 WORLD CUP QUALIFIERS
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Fixtures
Friday, February 18: 10am Oman v Nepal, Canada v Philippines; 2pm Ireland v UAE, Germany v Bahrain
Saturday, February 19: 10am Oman v Canada, Nepal v Philippines; 2pm UAE v Germany, Ireland v Bahrain
Monday, February 21: 10am Ireland v Germany, UAE v Bahrain; 2pm Nepal v Canada, Oman v Philippines
Tuesday, February 22: 2pm Semi-finals
Thursday, February 24: 2pm Final
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New Zealand 57-0 South Africa
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