On the eve of its annual Credit Policy, the Reserve Bank of India has released its macroeconomic report.
In its report, the central bank has said that the macroeconomic outlook for fiscal year 2012 remains favourable aided by predicted normal monsoon, demand conditions and positive lead indicators for services. "GDP growth during 2010-11 reverted to its recent trend, aided by a rebound in agricultural growth. Non-agricultural growth, however, was slightly below trend," the report said. However, it added that inflation may remain elevated for some more time despite the current anti-inflationary bias in the monetary stance. "High oil and other commodity prices pose as the biggest risk to inflation and growth," the statement explained. Bankers expect 25-bps hike tomorrow. Will RBI comply? Talking about the global scenario, the report states that though there is all likelihood of moderation in growth in FY12, persistently high inflation is a significant threat. "The pressures for rate cycle turning even in advanced economies can no longer be ignored," it stated. Emphasising on the importance of lowering inflation as quickly and decisively as possible, the RBI's note said, "Headline inflation exhibited strong persistence in 2010-11 due to supply-side shocks and gradual generalisation of price pressures. This could remain elevated in the first half of 2011-12 before declining gradually in the second half, but could remain above the Reserve BankDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
