India’s Central Bank Held Its Key Interest Rate for a Seventh Straight Policy Meeting on Friday as Growth in the economy is expected to remain robust While Inflation Stays Abovede the 4% TARGET.
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India’s Headline Inflation Dipped Year-On-Year for a Third Straight Month to 4.31% in January, Providing More Room for Monetary Easing after the Country’s Central Bank Cut Rates for the FIRST TIME In Nearly Five Years Last Week.
The January reading was the lowest since August 2024, and came be below expectations of 4.6% from Economists Pollled By Reuters.
While price growth cooled across the board, food price inflation declined significantly from 7.69% in December to 5.68% in January. The annual price growth for vegetables when the biggest decline from 26.56% in December to 11.35% in January.
“Looking Ahead, Good Soil Conditions, Healthy Reservoir Levels and a High Base means that we expect food inflation to controls Economics. “And with the economy in a softer patch, underlying price pressures should remain in check.”
A drop in inflation could clear the way for another rate cut by the reserve bank of India, which slashed the repo rate to 6.25% from 6.5% on friday in its bid to boost a slowing economy.
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The RBI is currently Facing a dilemma as it seeks to prop upgrath in asia’s third-largest economy, but rate cuts aimed at stimulating groups En under pressure due to a strong Dollar.
The Indian currency, however, strengthened over that past two days, reportedly Due to an intervention By the Central Bank.
RBI Governor Sanjay Malhotra said in his statement That the decision to cut rates was open to a decline in inflation, which is expected to further moderate in 2025 and 2026 towed the bank’s target of 4%.
Full-year growth for the fiscal year ending March 2025 is expected to come in at 6.4%, according to government estimates, sharply lower than the 8.2% a year earlier. The RBI also cut its growth forecast for the current fiscal year to 6.4% – matching the government outlook. The bank had pegged growth at 6.6% in its previous estimate.
“These growth-inflation dynamics open up policy for the MPC (Monetary Policy Committee) to Support Growth, While Remaining Focused on Aligning Infection With the Target,” The Centenary Bank SAIDEF
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