Central Bank cuts rates by 40 bps despite high inflation
Headline inflation is bound to rise further to 5 percent for November despite which the Reserve Bank of India (RBI) has decided to go for two consecutive rate cuts on growth concerns by 40 bps. This was confirmed by a report released on Thursday.
The GDP growth plummeted to a six-year low of 5% for the June quarter and is expected to come lower for the September quarter and dip further below the 5% for the Financial Year 2020. The release stated that the consumer price inflation fastened to 4.62% in October in official data that was released on Wednesday resulting in concerns over RBI’s rate stance.
It further said that the fundamental drivers of inflation remain weak resulting in the non-food and non-fuel core inflation getting limited to 3.3% in October as against September’s 3.7%.
On the aspect of growth, the release stated that the conditions will continue for at least one more quarter and estimated growth by gross value-added basis slipping to 4.7% in September from 4.9% in June.