Inflation is expected to firm rbi relative bearing indicator forex during the first quarter of 2018-19 before moderating in the remaining part of 2018-19 as the direct impact of the increase in house rent allowances for central government employees fades away, which has to be looked through. Economic activity is expected to accelerate with the strengthening of investment activity, supported by consumption demand and robust credit growth.
October 2017 flagged significant shifts underway in the macroeconomic environment. Some of them have gained traction since then while others are incipiently in motion. Global economic activity has continued to strengthen and is becoming increasingly synchronised across regions. Global trade is outpacing demand after lagging behind for two years. Oil prices have firmed up again on the edge of a delicate demand-supply balance.
After languishing for five consecutive quarters, economic activity in India is quickening, as estimates and high frequency as well as survey-based indicators etch out for the second half of 2017-18. As this effect wanes, inflation could moderate in the remaining part of 2018-19 from an upturn in Q1 under the baseline assumptions. Fiscal slippages for 2017-18 and 2018-19, along with the postponement of the medium-term adjustment path, are a key risk to the growth and inflation outlook. December 2017 and February 2018 in accordance with the pre-announced bi-monthly schedule.
The MPC voted to keep the policy rate on hold in these meetings, maintaining its neutral stance of the fourth bi-monthly resolution of October 2017. Against this backdrop, the MPC voted in December by a majority of 5-1 to maintain status quo on the policy rate, while continuing with a neutral stance. As in the October meeting, one member voted for a rate cut to support economic activity. In February, the MPC persevered with status quo on the policy rate with a vote of 5-1 and a neutral stance, while reiterating its commitment to keep headline inflation close to 4 per cent on a durable basis. March 2018 and also explain the reasons for deviations of actual outcomes of inflation and growth from staff’s projections in the October 2017 MPR.
Indian refineries in the ratio of 72:28. It appreciated till the early part of January 2018 on buoyant capital inflows and weakening of the US dollar. Headline CPI inflation reached a peak of 5. The delayed setting in of the seasonal food prices moderation took down headline inflation to 4. Turning to the outlook, inflation expectations of urban households remain elevated, according to the March 2018 round of the Reserve Bank’s survey.