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This article is more than 3 year old.

Here's what RBI said on inflation and GDP growth

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Here's what RBI said on inflation and GDP growth.

Here's what RBI said on inflation and GDP growth
The Reserve Bank of India (RBI) increased the repo rate and the reverse repo rate by 25 basis points, for the second consecutive time, to 6.50 and 6.25 percent, in its August bi-monthly monetary policy announced on Wednesday.
The CNBC-TV18 poll had suggested a close call in the decision to raise or pause the key policy rates.
RBI monetary policy meeting:
Sixty percent of the economists polled believed that there may be a 25 basis points (bps) rate hike, while the remaining expected a status quo.
Let's take a look at the central bank's commentary on inflation and gross domestic product (GDP).
Inflation
  1. The consumer price index (CPI) inflation forecast lowered to 4.6 percent for H1FY19 against 4.8-4.9 percent projected earlier.
  2. The CPI forecast for H2FY19 raised to 4.8 percent against 4.7 percent projected earlier.
  3. The CPI inflation projected at 5 percent for Q1FY20 with risks evenly balanced.
  4. Excluding house rent allowance (HRA) impact, CPI projected at 4.4 percent in Q2, 4.7-4.8 percent in H2FY19.
  5. GDP Growth
    The RBI has retained GDP growth projection for FY19 at 7.4 percent. GDP growth is projected in the range of 7.5-7.6 percent for the first half of the current fiscal and between 7.3-7.4 percent for the second half.
    Factors Shaping Inflation Outlook
    1. Minimum Support Price (MSP) hike by government will have a direct impact on food inflation, second round effects on headline inflation.
    2. Overall performance of monsoon so far augurs well for food inflation in medium-term.
    3. Crude oil prices have moderated slightly, but remain at elevated levels.
    4. Goods and Services Tax (GST) reduction for certain goods likely to have some direct moderating impact on inflation.
    5. Core inflation has been broad-based and risen significantly in recent months.
    6. Financial markets continue to be volatile.
    7. Risks To Inflation projection:
      1. Crude oil prices continue to be volatile and vulnerable to both upside and downside risks.
      2. Volatility in global financial markets continues to impart uncertainty to the inflation outlook.
      3. Households’ inflation expectations have risen significantly in the last two rounds.
      4. Manufacturing firms have reported hardening of input price pressures in Q2 of 2018-19.
      5. Monsoon has been normal temporally so far, but its regional distribution needs to be carefully monitored.
      6. Any fiscal slippage at the centre/state levels could have adverse implications.
      7. Staggered impact of HRA revision by state governments may push headline inflation up.
      8. Read our full coverage on the RBI Monetary Policy here
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