'RBI policy pause supports growth; balanced response to currency weakness'
Business Standard·- The Monetary Policy Committee decided to maintain the repo rate at 5.25% amid a significant shift in macroeconomic conditions, prioritizing economic stability over further easing. - This decision comes in light of increased inflation risks due to geopolitical tensions and rising energy prices, prompting a revision of the FY27 CPI inflation projection to 5.1%. - The pause in monetary policy is seen as essential for effective transmission and maintaining credit affordability, supporting sustainable growth amid external challenges.Fuel austerity dampens outlook for India's annual product demand growth
Business Standard·- India's transportation fuel demand growth is projected to slow significantly in the latter half of 2026 due to government conservation measures, high crude oil prices, and a weak rupee. - Recent price hikes of Rs 5 per litre for petrol and diesel, alongside decreased consumption forecast by analysts, indicate a downturn in mobility and discretionary travel. - Austerity measures reflect a shift towards prioritizing macroeconomic stability and fuel supply security, potentially impacting transportation fuel growth unless crude prices decline or further support is provided.RBI not in favour of rate hikes to defend rupee, prioritises inflation
Business Standard·- India's central bank, the Reserve Bank of India (RBI), does not view interest rate hikes as the primary solution to support the rupee, focusing instead on inflation control. - The RBI is exploring alternative measures, such as dollar deposit schemes and tax adjustments for investors, particularly as the rupee hit a record low due to energy price shocks. - While inflation is currently subdued, concerns exist that raising rates could hinder growth, with the next rate decision set for June 5, amidst varied opinions from economists about potential tightening.FTAs, lower import duties to boost India's FDI flows: ADB chief economist
Business Standard·- Free Trade Agreements (FTAs) and reduced import tariffs are expected to boost net foreign capital inflows into India, which have declined recently, according to ADB Chief Economist Albert Park. - India saw net Foreign Direct Investment (FDI) drop from $38.6 billion in 2021-22 to $10.2 billion in FY24, but it improved to $3 billion in the first half of FY26. - Park predicts higher crude oil prices due to Middle East disruptions will negatively impact India's GDP growth by 0.6%, with ADB projecting a growth rate of 6.3% for the current financial year.