Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

India holds rates amid buoyant growth, to monitor inflation

Published Dec 07, 2023 11:54PM ET Updated Dec 08, 2023 03:25AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. A man walks behind the Reserve Bank of India (RBI) logo inside its headquarters in Mumbai, India, April 8, 2022. REUTERS/Francis Mascarenhas/File Photo

By Swati Bhat and Sudipto Ganguly

MUMBAI (Reuters) -India's central bank on Friday raised its fiscal year growth forecast on the back of a robust economy and flagged continuing tight monetary policy while it keeps watch over inflation risks.

The Reserve Bank of India expects the economy to expand 7% in the current fiscal year from 6.5% after stronger than expected growth in the July-September quarter.

"The Indian economy presents a picture of resilience and momentum," Reserve Bank of India (RBI) Governor Shaktikanta Das said in a prepared statement. "Growth remains resilient and robust, surprising everyone."

At a press conference later in the day, RBI Deputy Governor Michael Patra called the upgraded GDP estimate of 7% "conservative".

The outlook for inflation, however, remains uncertain, the central bank officials said.

That prompted the central bank's six-member monetary policy committee, consisting of three RBI and three external members, to keep the repo rate unchanged at 6.50%, for the fifth consecutive meeting, and in line with the unanimous consensus in a Reuters poll.

The vote on the repo rate decision was also unanimous.

The RBI had raised the repo rate by a total 250 basis points (bps) since May 2022 in efforts to cool surging inflation, which dropped to a four-month low of 4.87% in October, but is expected to remain above the RBI's 4% medium-term target for some time.

The near-term outlook is "masked by risks to food inflation," said Das, which might lead to an uptick in November and December even though core inflation, which excludes volatile food and fuel prices, has broadly moderated.

The central bank projected consumer inflation at 5.4% for 2023-24, unchanged from its previous projection.

The MPC maintained its policy stance of "withdrawal of accommodation" to ensure inflation progressively aligns with the committee's target while remaining supportive of economic growth.

Any kind of policy loosening is "not on the table at this point", Das said at the press conference. "Inflation management cannot be on autopilot."

Economic Affairs Secretary Ajay Seth, attending an event in New Delhi, said supply-side measures to tame food inflation would continue to be taken.

Economists expect rates to stay on hold for some time.

"The economy is performing exceptionally well, which limits any immediate need for looser policy," said Shilan Shah, deputy chief emerging markets economist at Capital Economics.

"We maintain our call for a prolonged pause on repo rate at 6.5% well into financial year 2024-25," said Suvodeep Rakshit, senior economist at Kotak Institutional Equities. "The good part is that growth remains resilient and core inflation remains under check."

The Indian rupee was slightly weaker at 83.3650 to the dollar while equity markets kept their gains following no change to the policy rate and stance.

Benchmark bond yields were stable at 7.2419%.

In October, the central bank said it may consider bond sales via open market operations to keep liquidity conditions tight amid elevated inflation.

However, tighter than expected liquidity conditions in the banking system meant such sales were not needed.

The central bank will remain nimble, said Das, skipping any forward guidance on how it will manage liquidity.

India holds rates amid buoyant growth, to monitor inflation

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email