MUMBAI: Extreme weather conditions may pose upside risks to inflation, along with prolonged geopolitical tensions that could keep crude oil prices volatile, the Reserve Bank said in its April Bulletin on Tuesday.
In the first monetary policy review earlier this month the RBI- led MPC had warned of rising food prices as the main reason for the sticky inflation, forcing it to keep the policy and policy rates unchanged.
The Met department had earlier said the country could face heatwave conditions which would upend prices which of late has started trending down.
Retail inflation has eased to 4.9 percent in March after averaging 5.1 percent in the preceding two months.
The Reserve Bank, which mainly factors in CPI while arriving at its bi-monthly monetary policy, has kept the key interest rate unchanged at 6.5 percent since February 2023, citing concerns on the inflation front primarily led by food items.
The central bank economists further noted that global growth momentum has been sustained in the first quarter of 2024, and the outlook for world trade is turning positive now despite the tension in West Asia.
"Domestic growth conditions are shaping up for an extension of a trend upshift in real GDP growth, backed by strong investment demand and upbeat business and consumer sentiments," the article said.
In the April policy the central bank had maintained a 7 percent growth forecast for the current fiscal.