Inflation and GDP: Monetary Policy Committee (MPC) Of RBI Targeted Inflation At 5.3%

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has completed its 3 days meeting today, on December 8, and RBI Governor Shaktikanta Das addressed the nation in the morning.

At present the country's major concern is inflation, and the MPC is set to control it.

Inflation targeted at 5.3% in FY 22

India's CPI inflation earlier increased to 4.5% in October, and 4.3% in September. Today Das said, at present, India's inflation is broadly standing around the target of 4%. consumer confidence is growing now according to the MPC, for a sharp decline in Covid contamination and vaccination drive. Crude oil prices have also often since October, which is a positive sign for the country. Continued policy support is important for the country right now, Das said today.

Inflation will be at a peak in Q4 in FY 22, according to the RBI Governor, and it will soften afterward. The CPI inflation is targeted at 5.3% in FY 22, at 5.1% in Q3, and 5.7% in Q4 of FY 22.

GDP lookout

Das said today, GDP has grown to 13.6% H1 2022, and an 8.4% real GDP growth, in the last quarter, has been significant, strongly surpassing its pre-Covid level. The pent-up demand in the festive season has contributed importantly, and economic growth is experiencing traction now. Production of capital goods improved, along with its export enhancement for the 8th consecutive month. After the second wave, However, the economic growth is not strong enough to be self-sustained and it needs monetary policy supports. The real GDP growth target has been retained at 9.5% for FY 2022, and projected at 17.2% in Q1 FY 21-22, and at 17.8% Q2 FY 21-22.

Additionally, the central bank has maintained its 'accommodative' stance again and did not change the key lending rates, - the Repo rate at 4% and the reverse repo rate at 3.35%. Keeping in mind the present macroeconomic situation, the MPC has decided to do that. For 9 consecutive times, the rates have been kept at the same level.

Dhaval Ajmera, Director of Ajmera Realty & Infra India Ltd said, "RBI maintaining status quo on rates augurs well for brining equilibrium in the demand-supply economics of the real estate industry. With low loan interest rate regime, the home sales velocity witnessed across key Indian cities will continue on upward trajectory. The stock markets are expected to remain buoyant and realty index will continue to advance with positive bias in the short to medium term. The revision of GDP and inflation targets are seen to be milder than expectation. The upcoming discussion paper to make the digital payments more affordable is a positive take-away from Governor's speech. The announcements related to digital payments can offer disruption and bring dynamism in financial inclusivity expedition in the country".