Indian Economy Steady, But US Trade Tensions Pose Risks: RBI

The Indian economy remains resilient, supported by strong rural demand, the Reserve Bank of India (RBI) said in its monthly bulletin released on Thursday. However, the RBI cautioned that rising trade tensions with the US could pose a downside risk to growth. Meanwhile, average inflation remains below the RBI’s target of 4% for the current financial year. “Monetary policy, going forward, will continue to maintain a close vigil on incoming data and the evolving domestic growth-inflation dynamics to chart out the appropriate monetary policy path,” the RBI said. The central bank kept its key interest rate unchanged at 5.50% in August. Separately, a Reuters poll showed that India’s GDP growth is expected to slow to 6.7% yoy in April-June, down from 7.4% in the prior quarter. The RBI projects full-year growth to remain close to 6.5%, with Governor Sanjay Malhotra stating that the impact of higher tariffs is expected to be minimal. Official GDP data is scheduled to be released later today.