(CTN News) – India’s Inflation central bank has revised its growth forecast for the fiscal year, citing a strong economy. The Reserve Bank of India (RBI) now expects the economy to expand by 7% in the current fiscal year, up from the previous estimate of 6.5%.
This upward revision comes after better-than-expected growth in the July-September quarter. RBI Governor Shaktikanta Das described the Indian economy as resilient and robust, surprising everyone with its performance.
However, the central bank remains cautious about inflation risks and has decided to maintain a tight monetary policy.
At a press conference, RBI Deputy Governor Michael Patra referred to the upgraded GDP estimate as conservative. The central bank’s monetary policy committee, consisting of both RBI and external members, has unanimously decided to keep the repo rate unchanged at 6.50% for the fifth consecutive meeting.
Despite the positive growth outlook, the inflation situation remains uncertain.
The repo rate decision vote was also unanimous, indicating a consensus among the members of the committee. The Reserve Bank of India (RBI) has been gradually increasing the repo rate by 250 basis points since May 2022 in an attempt to control rising inflation.
Despite a slight decrease to 4.87% in October, inflation is expected to remain above the RBI’s target of 4% in the medium term.
Governor Das highlighted the uncertainty surrounding food inflation, which could lead to an increase in November and December. However, which excludes volatile food and fuel prices, has generally moderated.
The RBI’s projection for consumer inflation in 2023-24 remains unchanged at 5.4%.
The Monetary Policy Committee (MPC) has maintained its policy stance of gradually withdrawing accommodation to ensure inflation aligns with the committee’s target while still supporting economic growth.
Governor Das emphasized that there are no plans for any policy loosening at this point. Inflation management requires active monitoring and cannot be left on autopilot.
Economic Affairs Secretary Ajay Seth in New Delhi said efforts to control food would continue. Economists expect interest rates to remain unchanged for a while. Shilan Shah from Capital Economics stated that a strong economy reduces the need for looser policies.
Suvodeep Rakshit from Kotak Institutional Equities said they will keep the repo rate at 6.5% until 2024-25 due to resilient growth and control.