February 21st 2025.
In a recent Monetary Policy Committee meeting, RBI Governor Sanjay Malhotra emphasized the importance of strong policy frameworks and solid macroeconomic fundamentals in promoting resilience and overall stability. This sentiment was echoed in the meeting's minutes, which were released by the central bank on Friday.
Malhotra also highlighted the need to maintain high growth momentum while also ensuring price stability, which requires the use of various policy instruments to balance inflation and growth. Fortunately, inflation has been on a downward trend since October, after briefly surpassing the upper tolerance band. This has been aided by a strong kharif harvest, lower prices for seasonal vegetables, and a promising outlook for the rabi crop.
Looking ahead, the RBI Governor expects food inflation to continue to decline, which is a positive sign for price stability. He also noted that the budget proposals for agriculture and the government's commitment to fiscal consolidation will help anchor inflation expectations in the medium term. This, in turn, will contribute to the eventual alignment of CPI inflation with the target rate for the financial year 2025-26, which is projected to be at 4.2%.
On the other hand, real GDP growth for the current year is estimated to be 6.4%, which is lower than last year's robust 8.2% growth. However, there is hope for a recovery in the second half of 2024-25 and 2025-26, with forecasts ranging from 6.3% to 6.8%. This is expected to be supported by a strong rabi season and an improvement in both consumption and investment.
During the meeting, the MPC also reviewed various surveys conducted by the Reserve Bank to gauge consumer confidence, inflation expectations, and the performance of different sectors in the economy. They also closely examined the staff's macroeconomic projections and alternative scenarios in light of potential risks to the outlook.
[This article has been trending online recently and has been generated with AI. Your feed is customized.]
[Generative AI is experimental.]
