“The MPC is projecting 7.5-7.6 per cent in the first half of 2018-19 and 7.3-7.4 per cent with risks evenly balanced. In the assessment of the committee, uncertainty around inflation needs to be monitored in the coming months,” said Urjit Patel while commenting on the global growth which has sustained pace but became uneven since the earlier-released policy.
The governor said that the increased FDI flows in recent months have continued buoyant domestic capital market conditions well for investment activity. Adding to this, he said that the MPC expects a gradual recovery of south-west monsoon.
The MPC while adding that the volatility in global financial markets continues to impart uncertainty to the inflation outlook, states that robust corporate earnings, especially of fast moving consumer goods (FMCG) companies, also reflect buoyant rural demand.
Worth noting is, earlier, India’s central banking institution hiked the repo rate by 25 basis points to 6.50 per cent while maintaining a neutral stance on the stability in the market.
This time, the six-member Monetary Policy Committee (MPC) said that its decision is consistent with the neutral stance of monetary policy in sync with its broader objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent.