RBI Governor Shaktikanta Das has expressed confidence in the Indian economy saying that private consumption, especially urban demand has been quite healthy. Talking at the Annual FIBAC 2022 Conference, confluence of factors and circumstances is reverberating speedily across countries and jurisdictions. With monetary policy actions and stances undergoing a regime shift in the advanced economies (AEs), financial conditions have tightened sharply across markets and have accentuated financial stability risks. Emerging market and developing economies (EMDEs), in particular, remain highly vulnerable to these global spillovers. Capital outflows have led to reserve losses, sharp currency depreciations and spiralling imported inflation pressures. Several countries face acute debt distress, while many others are confronted with elevated food and energy prices. Conventional and technocratic policy making is increasingly getting challenged by unconventional and 'out of box' approaches.
In an unsettling global environment, the Indian economy has been growing steadily, drawing strength from its macroeconomic fundamentals and buffers. According to the IMF, India is slated to be one of the fastest growing major economies of the world in the current year as well as in the next year. The domestic recovery and growth have been more broad-based. As per the high frequency indicators (HFIs) for the recent months, private consumption – especially urban demand – has remained healthy. The contact-intensive services have continued to make smart rebound, aided by unfettered resumption of activities and full-fledged celebration of festivals after two and half years. External demand, however, remains a weak spot in the face of accentuating global economic slowdown. Domestic Inflation remains elevated and the central bank is closely monitoring the inflation trends as well as the effect of our past actions. In RBI's view, price stability, sustained growth and financial stability need not be mutually exclusive.
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