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RBI: ‘Inflation’ will be hit due to extreme heat, GDP growth may slow down

India’s GDP Growth Rate: Inflation may increase in the country due to weather. Along with this, due to ongoing tension in the global market, crude oil prices may remain elevated, which may increase inflation in the country.

GDP Growth: The effect of weather can be seen on the economy this time. Inflation may increase in the country due to weather. Along with this, due to the ongoing tension in the global market, the prices of crude oil may remain elevated, due to which inflation may increase in the country. This information has been given in the April Bulletin of RBI. 

Retail inflation based on Consumer Price Index (CPI) has declined to 4.9 percent in March. Earlier in the last two months it was on an average 5.1 percent. 

Repo rate stable at 6.5 percent

The Reserve Bank mainly keeps retail inflation in mind while determining the monetary policy. Citing concerns on the inflation front, the central bank has kept the repo rate stable at 6.5 percent from February 2023. 

shock due to excessive heat

The article in the topic ‘State of the Economy’ published in the Bulletin of the Reserve Bank says that summer is expected in the spring of 2024. Let us tell you that March 2024 is the hottest month of the last 170 years. The team led by Deputy Governor Michael Debabrata Patra has said in this article that a careful watch will have to be kept during the summer. Before the onset of monsoon, there is a possibility of a shock in the prices of food due to extreme heat. 

However, in the near term, prolonged geopolitical tensions coupled with adverse weather events could pose inflation risks. According to the RBI bulletin, conditions are being created for the extension of the turnaround in economic growth trend, which has taken average real GDP growth above eight percent during 2021-24. 

Growth should be 8 to 10 percent

According to RBI, the Indian economy will have to grow at the rate of 8-10 percent in the next decade to take advantage of its population-related benefits. India will continue to get population related benefits till the year 2055. It says that the pace of global growth has remained intact in the first quarter of 2024 and the outlook for world trade is turning positive. 

Loan interest rates are increasing

Bond yields and loan interest rates are rising in major economies. The possibilities that there were regarding reduction in interest rates have weakened. RBI has clarified that the views expressed in the bulletin are those of the authors and do not represent its official views.

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