Although Ind-Ra believes RBI's policy stance will continue to be accommodative in the near term, there is no scope for further rate cuts in 2015-16.

Since January 2015, RBI has cut key policy rates by a cumulative 1.25 percentage points (125 basis points).

The consumer price index based inflation hit a 14-month high of 5.41 per cent in November. Wholesale inflation, however, remained negative at (-) 1.99 percent in the month.

RBI keeps a close watch on retail inflation movements to decide on its monetary policy.

Ind-Ra said pulses and onion are the two food items that have spoiled the party lately.

A crackdown on hording and import have only marginally impacted pulses inflation so far.

On the deflationary trend in manufactured products, it said the sustained deflation suggests weak demand conditions in the economy. It also expects deflation in fuel prices to continue.

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