RBI likely to continue with hawkish stance after Q2 GDP shoots above estimates; Here's what experts say
Bank of India (RBI). Economists now say that with the Q2 GDP growth rate coming in well beyond expectations, the RBI may opt for a hawkish stance in its coming monetary policy committee (MPC) announcement on December 8. The economic growth would give space to the central bank, which held its rates for the fourth consecutive time in October, to focus on food inflation, which it believes is ‘uncomfortably high’.
Also Read: India remains fastest-growing major economy, Q2 GDP growth beats RBI estimates: 5 key takeaways "This could be the start of some early signs that there is a rebalancing from services to goods in the economy. The GDP print for the second quarter does pose an upside bias for our full-year forecast of 6.5 per cent,'' said Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram. ‘’We expect the Reserve Bank of India to remain hawkish at the upcoming policy as growth continues to show strength while inflation risks linger on,'' added Gupta.
Analysts also say that the central bank may start easing monetary policy in the second half of 2024. "An economy on fire, and the persistent food inflation threat, suggest to us that the RBI will be in no hurry to loosen policy," Capital Economics' Thamashi De Silva said. De Silvia added that she expected the central bank to start its easing cycle in the second half of 2024, much later than most major emerging economies.
Read more on livemint.com
