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The bank has pledged to bring overall wholesale inflation down to below 4.5 percent. Varma said the RBI's two previous cuts in the key rate at which it lends money to financial institutions still has not resulted in banks passing on the savings to businesses and consumers. That, plus a report last week showing growth in monthly industrial production slowed to just 0.6 percent could prompt the central bank to cut interest rates again when it meets May 3. "The balance favors probably easing," Varma said. "A rate cut is not a done deal, even though inflation numbers have come down." India's stock benchmark, the Sensex, was up 0.5 percent Monday afternoon to 18,334.63 as traders interpreted the inflation report as increasing chances of another interest rate cut.
[Associated
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