RBI warns on growth, inflation, ahead of policy

RBI warns on growth, inflation, ahead of policy

Mumbai: The Reserve Bank of India’s concerns over inflation continue even as its survey of professional forecasters saw a cut in the economic growth projection for fiscal 2013 to 6.5% from 7.2% a day head of the central bank’s quarterly monetary policy.

“Persistence of inflation, even as growth is slowing, has emerged as a major challenge for monetary policy. Inflationary pressures have persisted, with significant contribution from food and energy segments. Inflation expectations also remain sticky," RBI said in its macro economic review released on Monday.

“While core inflationary pressures are currently muted, a continued rise in real wages may spill over to core inflation," RBI said.

RBI’s survey also flagged inflation risks, increasing their wholesale price-based estimate to 7.3% from 6.9% earlier.

“Professional forecasters as well as external agencies have lowered growth projections. Surveys of business expectations confirm that confidence levels are low. Improving the investment climate by moving quickly to address bottlenecks in infrastructure space and removing constraints on FDI (foreign direct investment) are important," RBI’s macroeconomic review said.