Reserve Bank of India MPC Decision
The MPC decided to maintain the benchmark interest rate at 6.50%, unchanged since April 2023.
Inflation had fallen below the RBI’s target of 4% in July and August but has since risen to 5.5% in September.
The MPC described the decline in inflation as slow and uneven.
The MPC maintained its inflation projection at 4.5% and GDP growth estimate at 7.2% for 2024-25.
Adjusted inflation expectations:
Q2: 4.1% (previously 4.4%)
Q3: 4.8% (up from 4.7%)
Q4: 4.2%
The MPC switched from a hawkish to a neutral stance but remains focused on aligning inflation to the 4% target.
Food inflation, particularly from vegetables, is a concern.
Core inflation (excluding food and energy) is expected to rise.
Global oil and metal prices pose additional risks.
Hopes for a rate cut in December are slim; a potential cut might come in February if economic conditions improve.
Signs of cooling in economic activity, with weaker car sales and a contraction in industrial output noted.
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