Some of the latest data out of India have given reason for cheer, but there is plenty of evidence of continued cyclical weakness. For example, capacity utilisation rates are low, growth in sales of consumer goods has slowed so far this year, and bank lending growth is now at its weakest pace in over a decade. Perhaps most important, core inflation on both the CPI and WPI measures has continued to fall recently. The upshot is that policymakers still have scope to loosen policy further over the coming months.
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