DNA MONEY EDIT | RBI: Growth up, inflation down

As widely expected, the Reserve Bank of India (RBI) has kept all the key policy rates unchanged. The apex bank's decision to revise downward its inflation forecast amid several uncertainties has cheered investors on the stock market. What brings a smile on everyone's face is the revision in the consumer price index (CPI) to 4.7%-5.1% for the first half of 2018-19 and 4.4% for the second half. Economic growth is gaining momentum on the back of a revival in the investment activity, improving global demand and better exports. The only hotspot is the looming trade war which has the potential to shake up the global trade.

While the economic recovery is still at a nascent stage, RBI cannot remain mute towards several risks to the inflation outlook. Analysts point out that larger than expected increase in the minimum support price (MSP) could pose a threat to the inflation outlook.

The central bank has proposed to stipulate a minimum level of loan component in fund-based working capital finance to foster greater credit discipline among large borrowers. RBI can surely afford to wait longer before hiking the rates while keeping an eye on oil price movement and the monsoon outlook. Analysts expect a rate hike, but only by early next year.