RBI Monetary Policy: MPC projects FY25 GDP growth at 6.6%; cuts estimates from 7.2% earlier
- RBI Monetary Policy: Reserve Bank of India (RBI) Governor Shaktikanta Das while announcing a status quo on the repo rate and policy stance on Friday, December 6, expects the FY25 GDP Growth to be at 6.6%. The growth forecast for FY25 has been lowered from 7.2% earlier
RBI Monetary Policy: Reserve Bank of India (RBI) Governor Shaktikanta Das while announcing a status quo on the repo rate and policy stance on Friday, December 6, expects the FY25 GDP Growth to be at 6.6%
The RBI Governor after the Monetary Policy Committee (MPC) meeting, while pegged GDP growth rate to be at 6.6% for FY25, it expects ongoing quarter i.e Q3FY25 (October- December 2024) GDP growth to be at 6.8%
For the Q4FY25 (January- March 2025 quarter) RBI expects the GDP Growth to catch pace to 7.2%, which will be higher than RBI expectations for GDP growth in Q3 FY25.
As we move into the new financial year, for the first quarter of FY26 (Q1FY26 April -June quarter) RBI MPC expects GDP growth to come 6.9%.
The RBI MPC also expects GDP growth in Q2FY26 (July-Setember'2025 quarter) catching further pace as it pegs GDP growth during the quarter at 7.3% much better and an improvement over 6.9% in Q1FY26
The MPC proections for GDP growth should provide some respite, after a shocker was provided by the Q2FY25 GDP growth numbers
GDP had expanded by 5.4% from the previous year in the September quarter of 2024, slowing from the 6.7% expansion in the previous period. Notably iy was also well below market expectations of a 6.5% increase to record the weakest pace of growth since the December quarter of 2022.
The RBI release said that “real gross domestic product (GDP) registered a lower than expected growth of 5.4 per cent in Q2:2024-25 as private consumption and investment decelerated even while government spending recovered from a contraction in the previous quarter”. Investment activity is expected to pick up as per the RBI release. Also Resilient world trade prospects should provide support to external demand and exports
However RBI MPC too into considerations has taken into consideratio, the headwinds from geo-political uncertainties, volatility in international commodity prices, and geo-economic fragmentation continue to pose risks to the outlook.
Nevertheless with the weakness in growth observed in the second quarter of FY25, the FY25 GDP growth forecast has been reduced from 7.2% pegged earlier.
Expert Views
Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers said that “The cut in GDP forecasts for FY25 by 60 bps was confusing given the expectations of material improvement in economic activity in the second half. We continue to hold our full-year projections for FY25 at 7%”.
If we go by RBI's forecasts for improvement in economic momentum with higher CPI forecast for the full year along with a CRR cut intended to ease liquidity and thus lower the money market rates, the need for a Feb'25 cut is lower and expect RBI to enter the easing cycle from April'25, said Hajra
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
Catch all the Business News , Market News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
- Top Gainers
- Top Losers
- 52 Week High