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Below Quote On RBI Monetary Policy  by Heena Naik- Research Analyst - Currency, Angel One Ltd

On 7th Dec’22, the Reserve Bank of India hiked the policy repo rate by 35 basis points to 6.25% after inflation continued to stay above its tolerance band. The stance remained focused on the withdrawal of accommodation

Global growth is set to lose momentum as monetary policy actions tighten financial conditions and as consumer confidence weakens with the rising cost of livelihood. 

Capital flows to emerging market economies (EMEs) remain volatile and global spillovers pose risks to growth prospects.

For Indian economy, the outlook is supported by good progress of rabi sowing, sustained urban demand, improving rural demand, a pick-up in manufacturing, rebound in services and robust credit expansion.

Consumer price inflation moderated to 6.8% (y-o-y) in October as expected, but it still remains above the upper tolerance band of the target.

Core inflation is exhibiting stickiness. While headline inflation may ease through the rest of the year and Q1:2023-24, it is expected to rule above the target.

The medium-term inflation outlook is exposed to heightened uncertainties from geopolitical tensions, financial market volatility and the rising incidence of weather-related disruptions.

India’s inflation is projected at 6.7% in 2022-23, with Q3 at 6.6% and Q4 at 5.9%, and risks evenly balanced. CPI inflation for Q1:2023-24 is projected at 5.0% and for Q2 at 5.4%, on the assumption of a normal monsoon.

India’s real GDP growth for 2022-23 is projected at 6.8% with Q3 at 4.4% and Q4 at 4.2%, with risks evenly balanced. Real GDP growth is projected at 7.1% for Q1:2023-24 and at 5.9% for Q2.

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