India’s inflation slows

India’s inflation has now halted as a result of a fall in the cost of oil prices, as well as exports not suffering as much as economists had predicted.

Inflation is currently running at a five-month low at 8.84 percent and it has given the central bank leeway to reduce borrowing costs in order to sustain economic growth, as the finance minister has vociferously quoted over the past month.

In a recent rallying call both the International Monetary Fund and the Organisation for Economic Co-operation and Development have made calls for the Indian Central Bank to make further cuts in interest rates.

Finance Minister, Palaniappan Chidambaram, said in an interview last week that although growth in India’s $1.2 trillion economy is falling as a result of reduced demand in the US, Japan and the euro zone, domestic demand should be enough to see the nation’s economy continue to grow.

Bimal Jalan, the former governor of the Reserve Bank of India, has indicated that the current problem lies with restoring both consumer and business confidence which in turn will translate into sustained economic growth.

It is hoped that this window of reduced inflation, as well as the decline in commodity prices, will be seized by policymakers.

The central bank has already cut interest rates twice in October to 7.5 percent from 9 percent.

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