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RBI May  Hold Rates
World Economy

RBI May Hold Rates

Indian economy is expected to clock a growth of 7.4% this fiscal, and on the policy front, the Reserve Bank is likely to leave key rates unchanged at its August meet, says a UBS report. According to the Swiss financial services major, slowdown in real GDP growth in 2016-17 is likely and it expects growth of around 7.4% in 2016-17 after the 7.6% recorded in 2015-16, DNA reported. “The disinflationary effect of balance sheet repair is depressing economic activity towards a more sustainable path while external pressures are likely to depress the economy. On a more positive note, healthier balance sheets should set the stage for a growth recovery in 2017-18,” it added. On policy rates, it called upon RBI to factor in higher-than-expected May and June CPI inflation and the impact of partial implementation of the Seventh Pay Commission award. UBS expects the 2017-18 CPI forecast at 4.5%, from the previously estimated 4.2%.

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