Persisting uncertainties related to the US trade policies pose downside risk to the overall demand in the Indian economy while the inflation outlook for the near term has become more benign than anticipated earlier, RBI said in its latest bulletin .
In the August bulletin, the Reserve Bank of India (RBI) also said that India’s sovereign rating upgrade by S&P bodes well for capital inflows and sovereign yields, going forward.
The US has imposed a steep 50 per cent tariff on Indian goods.
According to the central bank, favourable rainfall and temperature conditions bode well for the kharif agriculture season and an increase in real rural wages may support rural demand in the second half of the financial year.
“Coupled with the benign financial conditions, ongoing transmission of rate cuts, supportive fiscal measures and rising household optimism, the environment is conducive for holding up aggregate demand.
“On the other hand, persisting uncertainties related to India-US trade policies continue to pose downside risk,” it noted.
Further, RBI said the inflation outlook for the near term has become more benign than anticipated earlier.
