New York: Fitch Ratings on Wednesday slashed Indiaast’s economic growth forecast for the current financial year to 7% from its estimate of 7.8% made in June, Reuters reported.
It also projected that the growth will slow down to 6.7% in the next financial year compared to the previous estimate of 7.4%.
The rating agency cited the global economic condition, elevated inflation and tighter monetary policy as the reasons for the latest outlook. “Inflation moderated in August as crude oil prices eased, but the risk to food inflation persists given negative seasonality towards the end of this year,” the agency added.
Rupee will remain at 79 against the US dollar by the end of 2022, while the retail inflation at around 6.2%, the agency said, according to PTI.
Retail inflation in India has remained above the upper limit mandated by the Reserve Bank of India for eight months. The central bank aims to keep inflation in the range of 2% to 6%.
On August 5, the Reserve Bank of India said that inflation is expected to remain above its 6% threshold in the second and third quarters of this financial year.
The bank has increased the repo rate by 50 basis points to 5.40% on three occasions this year to control inflation. The repo rate is the interest rate at which the central bank lends to commercial banks.
The bank also said that it was uncertain about when the Monetary Policy Committee will stop hiking the interest rate as the global economic situation was dynamic and uncertain. Scroll. In
