MUMBAI (Reuters) -India’s economy continues to hold up against a global flux, dealing with the impact of geopolitical tensions and trade uncertainties, the Reserve Bank of India said in its monthly bulletin released on Wednesday.
The RBI cut its key policy rate by a larger-than-expected 50 basis points last month and slashed the cash reserve ratio for banks as low inflation gave it room to focus on supporting growth amid volatile global conditions.
India’s economic activity remained resilient, helped by improving prospects for summer-sown crops, strong momentum in the services sector, and modest growth in industrial activity, the RBI said in its ‘State of the Economy’ article.
“High-frequency indicators suggest stability in aggregate demand,” the central bank said.
India’s retail inflation rate eased to 2.10% in June, a six-year low.
“De-escalating geo-political tensions in the Middle East and optimism on trade deals” along with some loosening of regulatory norms for infrastructure financing buoyed financial market sentiment in the second half of June, the RBI said in the bulletin.
However, in the first half of July, domestic investor sentiment remained cautious amidst ongoing uncertainty over a potential India-U.S. trade agreement and mixed corporate earnings in the quarter ending June, the central bank said.
(Reporting by Ashwin Manikandan; Editing by Ronojoy Mazumdar)
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