Below the quote on RBI Monetary Policy announced today by Dr. Manoranjan Sharma, Chief Economist, Infomerics Ratings

This Policy is on expected lines. Low global growth is on because of geo-politics-high inflation, deteriorating financial conditions, Russia Ukraine war and growing economic fragmentation. The financial system is constrained by higher inflation, rising interest rates and stress in financial markets.   

In view of global cues, improved crop sowing, uneven monsoon, good industrial growth, buoyant services activity, buoyant aggregate demand conditions, rising investment activity, and 2 % CAD, real GDP growth for 2023-24 is 6.5 % 

Higher food inflation in July occurred because of tomato prices and further increase in prices of cereals and pulses. Uncertainties also stem from El Niño conditions, global food prices and crude oil prices raising annual inflation projection to 5.4 %.  

Liquidity rose because of return of ?2000 banknotes, RBI’s surplus transfer to the government, pick up in government spending and capital inflows.  

With growth in bank credit, low NPAs and adequate capital and liquidity buffers, the Indian financial sector is stable. Hence in view of the evolving macro-economy and the trade-off between growth and inflation, the RBI rightly kept the rates and stance unchanged.  

Above views are of the author and not of the website kindly read disclaimer