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Inflation staying above 6% seen as risk to RBI's interest rates path

Headline inflation has stayed above 6% for the past two quarters

Photo: Bloomberg
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While a sharp drop in vegetable prices during December helped lower inflation expectations of households for the current period and three-month horizon, the one-year ahead inflation expectations were sticky at 10.1%. Photo: Bloomberg

Anirban Nag | Bloomberg
India’s central bank may have to propose raising interest rates if inflation holds above its target for a third straight quarter, prompting monetary and fiscal policy makers to double down on efforts to keep prices in check, according to a person familiar with the matter.
 
Headline inflation has stayed above 6% for the past two quarters, and breaching that level during the January-March period would require the Reserve Bank of India to inform the government in writing why its Monetary Policy Committee failed to meet its goal of keeping price-growth within the 2%-6% band mandated by law.

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