The Indian economy is expected to continue expanding, but persistent inflation is impacting consumer demand and has become the main risk to growth. The central bank noted that inflation is affecting discretionary consumer spending, holding back manufacturing companies’ growth and capital expenditure. The bank expects inflation to average 5.4% for the current fiscal year and 4.6% between Q1-Q3 of FY23/24. Officials indicated that rates would remain higher for longer, seeking inflation around its target of 4% on a durable basis before considering rate cuts.