India’s deepening economic slowdown gives the central bank more reason to cut interest rates this week, adding to the fiscal stimulus already in the works.The Reserve Bank of India will deliver its rate decision on Dec. 5, days after a report showed growth collapsed to 4.5% in the July-September quarter, the first time it’s been below 5% since 2013.Led by Governor Shaktikanta Das, the RBI has already cut interest rates by 135 basis points in five moves this year, the most by any Asian central bank. Policy makers have had their focus squarely on boosting Asia’s third-largest economy, and last week’s weak data gives them added reason to continue pushing for growth.“The weak numbers emphatically underscore the need of policy focus on growth,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai. “We are expecting the RBI to execute another rate cut of 25 basis points at its next meeting.”Last quarter’s growth slump showed a contraction in manufacturing and subdued investments. It was only government spending that bolstered the economy, with private consumption still fairly low key.A slew of high-frequency indicators suggest the slowdown extended into October. The central bank may be pushed to… Read full this story
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