Reserve Bank of India (RBI) Governor Shaktikanta Das, who will outline the Monetary Policy Committee’s decisions on Friday, is expected to convey a continuation of the central bank’s hawkish stance with a pause on interest rates, but may reset growth and inflation projections for 2023-24 in view of the second quarter growth numbers and food inflation worries.
While retail inflation had eased to 4.87% in October, the rise in food prices remained sticky at 6.6% and may have risen further in November as prices of onions, tomatoes and pulses have hardened since. The RBI had forecast an average inflation rate of 5.6% in the current quarter, based on which November and December may yet experience an almost 6% inflation rate.
For the full year, the RBI had projected an average inflation rate of 5.4% and real GDP growth of 6.5%, which may need a revisit as growth in Q2 overshot its estimate of 6.5% for the quarter to touch 7.8%.
“There can be some upward revision in the GDP growth numbers though they will not be very significant. We believe an upward revision of 0.1-0.2% can be expected here. Inflation forecasts may remain unchanged and, if at all there is a revision, [it] will be upwards,” reckoned Madan Sabnavis, chief economist at Bank of Baroda, who expects a status quo on rates and the policy stance in this bi-monthly review.
“The growth numbers will give comfort to the MPC and a continued pause becomes a certainty in this meeting. The “withdrawal of accommodation” stance could have a difference of opinion within the committee but it is likely to be retained,” said Ranen Banerjee, partner, economic advisory services at PwC India.
