“With GDP up by 6.1% year-on-year in January-March 2023 and auto sales, PMI (Purchasing Managers’ Index) surveys and credit growth remaining robust in recent months… we have raised our forecast for the fiscal year ending in March 2024 by 0.3pp (percentage points),” Fitch Ratings said in its June global economic outlook report.
The ratings agency also changed its view on the rates, saying the Reserve Bank of India (RBI) is likely to pause rates until early next year given the moderation in growth and easing inflationary pressures.
“We expect the RBI to pause its rate cycle for the time being before cutting early next year – a change from our previous call of one more 25 bps (basis points) increase to 6.75%,” it said.
A basis point is a hundredth of a percentage point.The RBI’s Monetary Policy Committee held the policy rate at 6.5% for the second consecutive meeting in June. The ratings agency said the full impact of the 250 bps monetary tightening done last year is yet to be felt.Fitch Ratings predicted that the policy rate would decline to 5.75% in 2024-25. It said it expects inflation to decline to 5% this fiscal and growth to rise to 6.5% for the next fiscal.
In its latest forecast, the Organisation for Economic Co-operation and Development (OECD) also said it expects the RBI to cut rates from mid-2024.