RBI pauses after 250 bps hike in repo rate Recent data on agriculture reveals record production in crops like rice, wheat, maize, oilseeds, sugarcane, mustard, rapeseed, and soybean. The government’s fixed capital formation including capital expenditure has shown impressive results, indicating positive prospects and a multiplier effect that can extend over the next few years. On an annual basis, agriculture and real estate have displayed exceptionally strong performance. The rate high by the RBI was in sync with the policy actions by the US Federal Reserve and other central banks of most OECD countries. The Reserve Bank had paused its rate hiking spree in April after raising the repo rate by 250 basis points from 4% to 6.50% in 11 months. READ I India’s stellar Q4 GDP growth rate unveils hidden narratives Major factors point to repo rate freeze The stellar Q4 performance by the economy is reflected in the annual GDP growth rate, which is estimated to be 7.2%, surpassing the projected range of 6.8-7%. High growth rates are observed across various sectors of the economy such as agriculture, manufacturing, construction, trade, and real estate, indicating a widespread and balanced expansion. The economy grew at 6.1%, much higher than the expectations of 4.2- 5.1% growth. The Q4 GDP growth rate had bettered the projections made by the RBI and independent forecasters. Repo rate may stay unchanged: The Monetary Policy Committee of the Reserve Bank of India will hold its bimonthly meeting between June 6 and June 8 in the backdrop of stellar performance by the Indian economy in the last few months. Stellar GDP growth and other favourable factors may prompt RBI to keep the policy repo rate unchanged in the next meeting.
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