RBI MPC policy: FY23 real GDP pegged at 7.8%; Q1 growth forecast at 17.2%

Das said there was some loss of economic momentum due to third pandemic COVID wave and the demand for contact intensive sector is still muted.

RBI Governor Shaktikanta Das while announcing the monetary policy kept repo and reverse repo rates unchanged at 4 percent and 3.35 percent, respectively.

The central bank retained retail (CPI) inflation for FY22 at 5.3 percent with Q4 inflation at 5.7 percent due to unfavourable base effects. CPI for January 2022 expected to move closer to upper tolerance band due to adverse base effects.

RBI retains CPI inflation forecast for FY22 at 5.3%

CPI for FY23 projected at 4.5 percent, with Q1 at 4.9 percent, Q2 at 5 percent, Q3 at 4 percent, Q4 at 4.2 percent.

Also Read: RBI Monetary Policy: Central bank leaves repo rate unchanged; Guv Das says inflation expected to peak in Q4

Abheek Barua, Chief Economist at HDFC Bank, said, “The RBI policy was largely on expected lines with, yet again, a clear emphasis on ensuring that the economy is on a path of durable growth recovery."

Barua said it showed a clear tilt toward growth and a view that inflation, where elevated, is driven more by the supply disruptions rather than entrenched demand-side pressures.

"Were that indeed the case, the RBI is likely to follow a gentle approach to the normalization and ultimately withdrawal of monetary support unlike Western central banks that have switched to a hyper-aggressive mode. This is consonant with the growth and inflation dynamics specific to India.”.

The three-day deliberations of the six-member MPC,  which is headed by RBI Governor, ended today. Ahead of the RBI policy meet, there was a consensus among analysts that the MPC will maintain status quo on repo rate.