Firming commodity prices, rising US dollar, and geopolitical tensions may delay RBI rate cuts. Elara Capital expects no rate cut until Q4FY25 due to global factors and sticky food inflation in India.
Stressing that the share of food in the household budget is high in India, RBI Monetary Policy Committee (MPC) member Ashima Goyal said policy needs to focus on increasing agricultural productivity, since stable agricultural prices are important for non-inflationary growth.
The growth-inflation projections, too, were unchanged, with GDP growth seen at 7% for FY25 and retail inflation (CPI) at 4.5%. While there were modest revisions in its quarterly projections, the full-year estimates stay as is.
RBI MPC announcements: Real GDP for 2024-25 Q1 is projected at 7.1 per cent. The projection has been slightly altered from the 7.2 per cent the apex bank estimated in the February MPC announcements.