ExplainSpeaking: Why RBI is likely to cut GDP growth forecast and raise interest rates

ExplainSpeaking-Economy is a weekly newsletter by Udit Misra, delivered in your inbox every Monday morning. Click here to subscribe

Dear Readers,

This week, between September 28th and 30th, the RBI’s Monetary Policy Committee (MPC) will meet again and recalibrate India’s monetary policy stance.

Like always, the two key things to watch out for will be :

1) What happens to interest rates?

2) What happens to GDP growth projections?

Why interest rates (read your EMIs) are likely to go up further

There are two broad reasons why RBI will hike interest rates this week.


By law, the RBI is required to prioritise maintaining price stability. Simply put, it is legally required to target a retail inflation rate of 4%. It has been given a leeway of two percentage points on either side. In other words, retail inflation can deviate from 4% but not breach the 2% to 6% comfort zone.

The RBI is already behind the curve. Since the start of 2022, inflation has…

Read more…