With inflation no longer a worry as India could even see a dip in prices by September, Moody on Friday said it expects the Reserve Bank to signal further cut in interest rates before the next policy.
“The Reserve Bank of India now has a strong case to further loosen monetary policy. As inflation has weakened significantly, interest rate cuts are needed to maintain an expansionary policy stance,” Moody’s Economy.com, an arm of Moody’s Group, said in a research report.
It further said that there is a possibility of India recording a year-on-year fall in the Wholesale Price Index during the second quarter of the next fiscal.
“Moody’s Economy.com expects another round of monetary easing before the next scheduled quarterly meeting,” it said.
After more than 14 months, inflation fell to 3.92 per cent from around 13 per cent in August due to fall in manufactured goods prices and slow demand.
Crude oil prices has also declined to around 40 US a barrel from $ 147 US a barrel last July.