Announcing the bi-monthly review of monetary policy, RBI governor Shaktikanta Das said the projection for GDP growth in 2022-2023 is retained at 7.2%. GDP growth in Q1 is expected at 16.2%, in Q2 at 6.2%, in Q3 at 4.1% and in Q4 at 4%, he added.

Reserve Bank of India’s Monetary Policy Committee (MPC) decided to hike the policy Repo Rate by 50 basis points to 4.9% in its June meeting. RBI Governor Das said MPC members voted unanimously to hike rates and to continue the withdrawal of accommodative stance.

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The rebound in contact-intensive activities in urban areas rebounded, Das said. Business sentiments have remained high, according to early estimates, however, the global supply chain crisis remains a risk, he added.

He said the MPC believes inflation is likely to remain above the 6% tolerance band for at least the first three quarters of the fiscal year.

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RBI Governor Shaktikanta Das said RBI will remain focused on bringing down inflation within the target.

“Inflation has steeply increased much beyond the tolerance level. The process of recovery in emerging market economies is also getting affected. But the Indian economy has remained resilient. We have started a gradual withdrawal of the extraordinary accommodation. The RBI will continue to be proactive and decisive in mitigating the fallout of the geopolitical crises on our economy. Our steps will be measured and calibrated,” said Das.  

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“The ongoing war turning out to be a dampener on global trade and growth. Domestic economic activity is gaining traction while inflation pressures have intensified. Inflationary pressures have become broad-based and remain largely driven by supply shocks. The Repo rate remains below its pre-pandemic level. Inflation is likely to remain near the upper tolerance of 6% for the first three quarters of this year. Sustained high inflation could unhinge inflation expectations”, he added.  

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“Information for April-May suggests domestic economic recovery is firm. Urban demand is recovering, rural demand is also improving. Surveys show capacity utilisation in the manufacturing sector increased to 74.5% in January-March,” Das said.