MUMBAI, Aug 29 (Reuters) – India’s economic performance continues to demonstrate strength, supported by robust demand in rural regions, although potential disruptions from trade policies in the United States present a challenge to future growth, according to the Reserve Bank of India’s latest monthly report. n nThe central bank noted that average inflation is expected to stay well under its 4% target during the current fiscal period. n nSign up here. n nThe bulletin emphasized that monetary authorities will remain attentive to incoming economic data and shifting domestic conditions involving growth and inflation to determine the best course for policy decisions. n nEarlier in August, the RBI maintained its benchmark interest rate at 5.50%, reflecting confidence in the economy’s stability. Despite this, analysts suggest that lower-than-expected inflation and the possibility of high U.S. import duties on Indian goods might allow for modest rate reductions in the coming months. n nIn July, consumer price inflation fell to 1.55%, the weakest level in eight years, driven largely by declining food prices, particularly for vegetables and pulses. n nRecent meeting minutes from the monetary policy committee highlighted global trade disputes and tariff developments as growing concerns that could hinder expansion, though officials reiterated that domestic fundamentals remain solid and inflationary pressures are under control. n nThe RBI stated that the near-term inflation forecast has improved more than previously expected. n nPositive monsoon patterns and favorable weather, combined with rising wages in rural areas, are expected to sustain strong consumption in the countryside. Additionally, earlier interest rate reductions and government spending initiatives are anticipated to support broader economic demand. n nHowever, ongoing uncertainties surrounding trade relations between India and the U.S. continue to represent a potential drag on economic momentum. n
— news from Reuters
— News Original —
India’s economy resilient but US trade policies a downside risk, central bank bulletin says
MUMBAI, Aug 29 (Reuters) – The Indian economy remains resilient, backed by strong rural demand, but trade tensions with the United States could pose a downside risk to growth, the Reserve Bank of India said in its monthly bulletin released late on Thursday. n nAverage headline inflation, meanwhile, is seen remaining significantly below the central bank ‘s target of 4% this financial year, it said. n nSign up here. n n”Monetary policy, going forward, would continue to maintain a close vigil on the incoming data and the evolving domestic growth-inflation dynamics to chart out the appropriate monetary policy path,” according to the bulletin. n nIndia ‘s central bank expectedly held its key interest rate unchanged at 5.50% earlier in August, saying the economy remains steady, even though economists expect steep U.S. tariffs on Indian exports and subdued inflation to open room for limited further easing. n nIndia ‘s retail inflation rate dropped to its lowest in eight years in July at 1.55%, due to falling prices of food, especially vegetables and pulses. n nLast week, minutes of the central bank ‘s latest policy meeting showed that committee members flagged evolving risks from global trade tensions and tariffs as a key drag on growth, but said the economy remains resilient with the inflation outlook benign. n n”Inflation outlook for the near term has become more benign than anticipated earlier,” the RBI said in the bulletin. n nFavourable rainfall and temperature conditions, along with improved rural wages, are likely to help keep rural demand strong while rate cuts and fiscal measures should help overall demand in the economy, it said. n n”On the other hand, persisting uncertainties related to India-U.S. trade policies continue to pose downside risk.” n nReporting by Swati Bhat and Ira Dugal in Mumbai; Editing by Mrigank Dhaniwala