RBI can back growth with ease; urban demand is low but so is inflation

While the latest gross domestic product (GDP) data has exceeded market expectations, the Reserve Bank of India (RBI) is likely to continue the rate-cutting cycle in the upcoming Monetary Policy Committee (MPC) meeting. Let’s look at domestic growth, inflation and global dynamics to better understand factors that will have a bearing on the RBI’s monetary policy decision.

 

The GDP growth has improved sharply to 7.4 per cent in Q4 (January-March, 2025), taking the full-year growth for FY25 to 6.5 per cent, in line with the National Statistics Office’s second advance estimate. A deeper dive into the GDP data shows that