India's natural rate of interest now at 1.4%-1.9%, says RBI bulletin

The Reserve Bank of India (RBI) has noted that India's natural rate of interest has increased in the post-pandemic period due to growth in potential output. As per the RBI's monthly bulletin, the estimate of the natural rate for Q4 2023-24 stands between 1.4% to 1.9%, compared to the earlier estimate of 0.8% to 1.0% for Q3 2021-22. The natural rate of interest represents an equilibrium point where economic growth aligns with potential, maintaining stable inflation levels.\r

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This adjustment indicates a strengthening economic environment post-pandemic, influencing monetary policy decisions to ensure stability and sustainable growth.