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By Bloomberg

India’s 10-year bond yield fell to a two- month low as Finance Minister Arun Jaitley urged the central bank to cut interest rates after inflation cooled.

Consumer prices rose 3.78 percent in July from a year earlier, the slowest pace since November, and compared with the Reserve Bank of India’s target of 6 percent for January 2016. “Hopefully the impact of inflation being under control is a fact that the central bank in all its wisdom will take note of,” Jaitley said in Mumbai Tuesday, the second time in less than a week the finance ministry has pushed RBI to ease.

“The CPI data does augur well for rate cuts,” said Ajay Manglunia, head of fixed income at Edelweiss Financial Services Ltd. in Mumbai. A 25 basis point reduction in the benchmark repurchase rate is the minimum expected from the RBI and that should help drive bond yields lower, he said.

The yield on sovereign notes due May 2025 was little changed from Monday at 7.74 percent in Mumbai, prices from the central bank’s trading system show. That’s the lowest level at close since June 22. Local bond and currency markets were shut Tuesday for a holiday.

RBI Governor Raghuram Rajan left the repo rate at 7.25 percent at an Aug. 4 policy review after three reductions this year, and said he will monitor developments before any further cuts. India’s economy could grow at a faster pace and risks to growth would be mitigated if borrowing costs were lowered, Finance Secretary Rajiv Mehrishi said on Aug. 14.

The rupee rose 0.1 percent to close at 65.2750 a dollar, rebounding from a two-year low of 65.4075 reached in intraday trading, according to prices from local banks compiled by Bloomberg. It has weakened 1.7 percent this month as India’s trade deficit widened and China’s surprise devaluation of the yuan roiled global markets and spurred a selloff in Asian currencies.