Note: PD: Dr. Pami Dua, CG: Dr. Chetan Ghate, MP: Dr. Michael Debabrata Patra, VA: Dr. Viral V. Acharya, UP: Dr. Urjit R. Patel, RD: Dr. Ravindra H. Dholakia

• The next meeting of the MPC is scheduled from 05- 07-Feb19.
• Global economic health weak: The U.S. and the Euro area weakened on trade tensions and political uncertainties in the latter. U.S. markets sold off on corporate earnings growth concerns. Emerging economies like China and Russia also lost traction due to weak demand and trade worries.
• Domestic economy broadly stable: Q2FY19 real GDP growth slowed to 7.1% yoy weighed down by moderation in private consumption (on subdued kharif output) and a drag from net exports. However, gross fixed capital formation (GFCF) expanded by double-digits for the third consecutive quarter, driven by the GOI’s infrastructure impetus, reflected in strong cement production and steel consumption. Further, encouragingly, capacity utilization at Q2FY19 stood at 76.1% vs. Long Term average of 74.9% and PMIs have remained in expansion mode.
• Real GDP:Going forward, lower rabi sowing may adversely affect agriculture and rural demand. However, Crude weakness, increasing Capacity Utilizations boosting corporate earnings and virtual closing of the output gap keep growth projections of the RBI largely unchanged vs. last MPC meet.