The monetary policy committee (MPC) headed by RBI governor Shaktikanta Das drew comfort from signs of “broadening” of economic activity to retain the GDP growth projection at 7.2%. But the inflation estimate for the current and the next quarters were reworked, although for the full year it will remain at 6.7% – well above the central bank’s tolerance zone of 6%. But the projection for the current quarter has been revised downwards from 7.4% estimated in June to 7.1% now. On the other hand, for the December quarter, it has been revised upwards to 6.4%, from 6.2%, estimated earlier.
“With inflation expected to remain above the upper threshold in Q2 & Q3, the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium term,” Das said.