Central bank preparing for external stress, a theme to prevail in FY27
Business Standard·- The Reserve Bank of India (RBI) maintained the repo rate at 5.25%, focusing more on external pressures than on domestic demand. - While consumer-price inflation remained low at 3.5%, the RBI raised its FY27 inflation forecast to 5.1%, citing rising oil prices, disrupted supply chains, and a weak monsoon. - The RBI's measures to attract foreign capital indicate a shift towards managing external challenges rather than traditional inflation concerns, emphasizing the need for a stronger balance of payments amidst economic uncertainties.Fuel price hikes, weak monsoon may push up inflation: Finance Ministry
Business Standard·- India's finance ministry warns that retail inflation may increase due to recent fuel price hikes and weak monsoon rains. - Disruptions in energy supply from the West Asia conflict and a significant rainfall deficit could drive food inflation and hinder rural demand. - The economic outlook calls for policy vigilance due to elevated global energy prices, a depreciating rupee, and rising cost pressures, despite April's inflation rate being 3.48%.