Domestic growth likely to hold up on strength of investment demand, consumption: RBI Minutes
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The Reserve Bank of India (RBI) in its latest release ‘the minutes of the Monetary Policy Committee (MPC) meeting’ has said that the MPC expects domestic growth to hold up on the strength of investment demand, steady urban consumption and rising rural consumption.
According to the minutes, risks from volatile and elevated food prices remain high, which may adversely impact inflation expectations and result in spillovers to core inflation. There are also indications of core inflation bottoming out. Accordingly, the MPC decided to remain watchful on how these forces play out, going forward. The MPC stays resolute in its commitment to aligning inflation to the 4 per cent target on a durable basis. In these circumstances, the MPC decided to keep the policy repo rate unchanged at 6.50 per cent in the meeting.
The MPC reiterates the need to continue with the disinflationary stance, until a durable alignment of the headline CPI inflation with the target is achieved. Enduring price stability sets strong foundations for a sustained period of high growth. Hence the MPC also considers it appropriate to continue with the disinflationary stance of withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth.
