India’s real GDP expanded 6.7 per cent year-over-year in the second quarter of 2024
Moody’s said despite near-term uptick, retail inflation should moderate toward the Reserve Bank’s target in the coming months. File pic
Moody’s Ratings on Friday forecast a 7.2 per cent GDP growth for India in 2024, saying the Indian economy is in a sweet spot, but inflation risks may prompt the RBI to retain a relatively tight monetary policy this year.
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Moody’s said that despite the near-term uptick, retail inflation should moderate toward the Reserve Bank’s target in the coming months as food prices ease amid higher sowing and adequate food grain buffer stocks. The retail inflation scaled to a 14-month high of 6.21, breaching the RBI’s upper tolerance limit, on a sharp jump in vegetable prices.
The agency said sporadic food price pressures continue to inject volatility in the disinflation trajectory.
“Potential risks to inflation from heightened geopolitical tensions and extreme weather events underscore the RBI’s cautious approach to policy easing. Although the central bank shifted its monetary policy stance to neutral while keeping the repo rate steady at 6.5 per cent in October, it will likely retain relatively tight monetary policy settings into next year, given the fairly healthy growth dynamics and inflation risks.”
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