Published: Wed, December 06, 2017
Sci-tech | By Carrie Guzman

RBI expects retail inflation to range 4.3-4.7% in H2 FY'18

RBI expects retail inflation to range 4.3-4.7% in H2 FY'18

The six member monetary policy committee (MPC) today, chaired by RBI governor Urjit Patel, made a decision to maintain the status quo by 5:1.

RBI on Wednesday expectedly kept interest rates unchanged but raised the inflation forecast for the remainder of the current financial year to 4.3-4.7 per cent.

Mumbai: The Reserve Bank on Wednesday retained economic growth projection for 2017-18 at 6.7 per cent saying that the risks are evenly balanced.

Consequently, the reverse repo rate remained at 5.75 per cent. In the meantime, the nation's inflation is expected to slightly accelerate in November and December on the base effect after rising to 3.58 percent year-on-year in October from 3.28 percent a month earlier. That's low by Indian standards, but not far from the central bank's 4 percent target.

The RBI said the MPC remains committed to keeping headline inflation close to 4 percent on a durable basis.

The six-member Monetary Policy Committee noted that the evolving trajectory needs to be carefully monitored and any increase in food and fuel prices may further harden inflationary expectations.

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All 15 participants in a poll conducted by Mint said the RBI would keep its interest rate on hold for a long period of time due to concerns over rising inflation.

The figures showed that GDP accelerated to 6.3 percent in the three months to September after five quarters of slowing growth stretching back to early 2016.

Ratings agency ICRA, in a study, said: "Although the CPI inflation or retail inflation for October is lower than the range of 4.2 per cent to 4.6 per cent for the second half of FY18 that the MPC had forecast in its previous review, and the recent revision in GST rates would ease price pressures, certain inflation risks persist".

Soumya Kanti Ghosh, group chief economic adviser at State Bank of India, said the RBI will try to give a neutral perspective because the recovery in growth was still at a nascent stage.

India's benchmark 10-year bond yield fell 2 basis points to 7.05 percent from around 7.07 percent before the policy decision.

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