The Reserve Bank of India’s decision to raise its growth forecast in October is relatively unusual, but its upward revision to the inflation outlook is rarer still, a Moneycontrol analysis shows.
The central bank delivered its first rate hike in three years, raising the policy rate from 5.25 percent to 5.5 percent. The RBI raised its GDP growth forecast for FY27 to 7.1 percent in October from 6.7 percent projected in August, an upgrade of 40 basis points.
This is only the second time in the FY22-FY27 period that the central bank has raised its full-year growth projection between the August and October policy reviews.
More unusually, the RBI also raised its FY27 retail inflation forecast to 5.2 percent from 5 percent in August. This is the first time in six years the central bank has revised its inflation estimate upward mid-year.
RBI’s growth estimates have largely remained unchanged between August and October in recent years. For FY22, the central bank retained its growth estimate at 9.5 percent in both August and October. In FY23, it lowered its estimate to 7 percent in October from 7.2 percent in August.