India CPI data raised the possibility of an interest rate cut outside the scheduled review cycle

India consumer price inflation came in at 5.2% y/y in March, from 5.4% y/y in February, higher than most had expected. 

Consumer price inflation unexpectedly dropped in March as concerns over the impact of heavy rains on food inflation proved unfounded. What's more, core inflation remains low, and headline inflation is now comfortably below the Reserve Bank's near-term target. This has raised the possibility of an interest rate cut outside the scheduled review cycle for the third time this year.

"Today's data leave the door open for further cuts to the repo rate, which has already been trimmed by 50bp to 7.50% this year. There is a significant chance of the next 25bp cut coming in an unscheduled meeting before the next scheduled announcement in June. 

Looking ahead, we think that the RBI will succeed in meeting its near-term inflation target, which should leave the door open for further cuts in interest rates this year." - said Capital Economics in a report on Monday