RBI lowers growth forecast to 6.5%

MUMBAI: A day before it reviews interest rates in its monetary policy review, the Reserve Bank Of India (RBI) has kept the market guessing by publishing a sharply lower growth forecast of 6.5% for 2012-13 . At the same time, RBI has said that the near-term outlook on inflation continues to be marked by a number of upside risks, despite the significant slowdown in growth.

Lower growth forecasts typically increase hopes of a rate cut. However, RBI has queered the pitch by stating that persistent inflation limits the space for monetary policy to revive growth.

In its report on macroeconomic and monetary developments , which is published on the eve of the monetary policy, RBI has reported the findings of its poll among professional forecasters on the economy. According to the poll, India's GDP growth rate forecast for 2012-13 has been lowered to 6.5% from the earlier 7.2% on the back of a weak monsoon and high inflation.

Edited By Cen Fox Post Team

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Posted in: 31st July 2012