INDIA’S consumer price inflation unexpectedly slowed to a three-month low in March, which could encourage the Reserve Bank of India to deliver another off-cycle interest rate cut to boost economic recovery.

    Retail prices rose 5.17 percent year on year last month, slower than a 5.5 percent annual rise predicted by analysts in a Reuters poll and a 5.37 percent gain in February.

    Food prices were up 6.14 percent year on year in March compared with a revised 6.88 percent rise a month earlier.

    With inflation below the 6 percent upper end of the central bank’s target range, some analysts expect Reserve Bank of India (RBI) chief Raghuram Rajan to surprise investors with another rate cut.

    The central bank has cut interest rates twice this year at unscheduled meetings, but kept its key repo rate on hold at 7.50 percent last week, waiting to assess inflation pressures and give commercial banks more time to cut lending rates.

    “This has raised the possibility of an interest rate cut outside the scheduled review cycle for the third time this year,” said Shilan Shah at Capital Economics, who expects a 25 basis point cut before a scheduled policy review June 2.

    Before the data, many economists were expecting the RBI to keep rates unchanged for now, but cut once more in late June.

    (SD-Agencies)