Country Conditions are being created for a faster growth rate of real gross domestic product (GDP) in the US, but prolonged global tensions coupled with adverse weather events may pose a risk of inflation. This was said in the April bulletin of RBI. Retail inflation based on Consumer Price Index (CPI) declined to 4.9 percent in March. Earlier in the last two months it was on an average 5.1 percent. The Reserve Bank mainly takes into account retail inflation while determining its bi-monthly monetary policy.
Repo rate is stable since February
Citing concerns on the inflation front, the central bank has kept the repo rate stable at 6.5 percent from February 2023. An article titled ‘State of the Economy’ published in the Reserve Bank’s Bulletin says that the spring of 2024 is expected to be hot. Actually, this indicates that March 2024 will be the hottest March month of the last 170 years. The team led by Deputy Governor Michael Debabrata Patra said in this article that a careful watch will have to be kept during the summer. Before the arrival of monsoon, there is a possibility of shock in the prices of food items due to extreme heat.
Risk of inflation may arise
“However, in the near term, prolonged geopolitical tensions coupled with adverse weather events could pose inflation risks,” according to the article. According to the RBI bulletin, conditions are being created for the extension of the reversal in the economic crisis, which has pushed average real GDP growth above eight per cent during 2021-24. The article says, “To achieve its developmental aspirations over the next three decades, the Indian economy will need to grow at 8-10 per cent per annum to capitalize on its demographic gains over the next decade.
Population related benefits will continue till 2055
India will continue to get population related benefits till the year 2055. The report said that the pace of global growth has remained intact in the first quarter of 2024 and the outlook for world trade is turning positive. Bond yields and loan interest rates are rising in major economies. The possibilities that there were regarding reduction in interest rates have weakened. RBI has clarified that the views expressed in the bulletin are those of the authors and do not represent its official views.
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