How RBI sees economys' variables at play -  Insight

How RBI sees economys' variables at play - Insight

With RBI maintaining liquidity stance as "withdrawal of accommodation", guiding 4% inflation target and with monsoon getting delayed, a rate cut looks unlikely anytime soon.

The same may result in some pressure on long bond yields with 10-year trading with an upward bias in the near term. The Indian 10Year closed at 7.03 last.

To understand the economic variables at play thriough RBI lense on inflation, investment outllok by the Govt, private capex and commodity prices, lets deep dive into RBI MPC published comments. 

"Going forward, the headline inflation trajectory is likely to be shaped by food price dynamics.

Wheat prices could see some correction on robust mandi arrivals and procurement. Milk prices, on the other hand, are likely to remain under pressure due to supply shortfalls and high fodder costs.

The forecast of a normal south-west monsoon by the India Meteorological Department (IMD) augurs well for kharif crops;however, the spatial and temporal distribution of the monsoon would need to be closely monitored to assess the prospects for agricultural production.

Crude oil prices have eased but the outlook remains uncertain.

According to the early results from the Reserve Bank’s surveys, manufacturing, services and infrastructure firms polled expect input costs and output prices to harden. A clearer picture will emerge when the final survey results are available.

The higher rabi crop production in 2022-23, the expected normal monsoon, and the sustained buoyancy in services should support private consumption and overall economic activity in the current year.

The government’s thrust on capital expenditure, moderation in commodity prices and robust credit growth are expected to nurture investment activity. 

Weak external demand, geoeconomic fragmentation, and protracted geopolitical tensions, however, pose risks to the outlook."

Source- RBI MPC Meet June 8th



# Disclaimer- Please note that this Blog has been created with the primary goal of providing its readers with up-to-date information on the Financial Markets. Its purpose is to share knowledge about Financial products, insights from Market experts, recent developments in the financial industry, and business-related information about companies. It is important to emphasize that the Blog should not be interpreted as providing any form of advice. It does not intend to recommend or endorse the buying, selling, or trading of any financial product. The Blog is purely educational in nature.

Stay Connected