The bank now forecasts 1.2 percent growth this year, down from 1.7 percent predicted three months ago, the biggest downgrade since the 2016 referendum.
Mumbai: Bankers say piles of bad debt and the high cost of deposits mean they are unlikely to reduce interest rates on loans by as much as the central bank cut its key lending rate in a bid to spur growth.
The bank expects growth this year to be just 1.2% - the slowest since 2009 when the economy was in recession. Britain's lenders could support the economy through a "disorderly" Brexit, the Bank of England said Tuesday, as the sector passed its latest round of stress tests.
Ricky Knox said: "Irrespective of whether we have a no-deal Brexit, the United Kingdom economy is slowing".
It came as the monetary policy committee voted to keep interest rates unchanged at 0.75 per cent.
In its accompanying quarterly inflation report, the Bank outlined the volatility of its forecasts depending on Brexit fears, estimating growth could be 1.5 per cent higher over the next three years - at a potential 1.6 per cent in 2019 - if a favourable deal is reached and uncertainty disappears.
The Reserve Bank Of India Thursday revised downwards the retail inflation forecast to 2.8 per cent for the last quarter of the current fiscal on account of favourable factors including benign monsoon. The Government's regulations, as already enacted, are weakening the impact of the monetary policy, the central bank warned. Nevertheless, the forecasts suggested that just one more quarter-point hike would be needed in the next three years to return inflation to close to the 2 percent target, down from nearly three hikes seen in November.
Amazon's HQ2 NYC: Amazon reconsiders headquarters after local opposition, report says
It's likely the change of heart has to do with the intense backlash against the idea from New York City residents. Though, protests have been a near constant over the four months since Amazon announced its move to Queens.
It's unclear she will be able to get any concessions and fears have grown in recent weeks that Britain could crash out of the European Union without a deal, a worst-case scenario that the Bank of England has previously said could see the British economy shrink by 8 per cent within months and house prices collapse by around a third.
Consumer confidence "took another step down in January", he cautioned, as household spending and the housing market have begun to show signs of being impacted.
The European Commission on Thursday sharply cut its 2019 eurozone growth forecast on an unexpected slowdown in Germany and protests in France.
The EC slashed its forecast for Italy to just 0.2 per cent for the whole year, compared with a previous forecast of 1.2 per cent, while it also trimmed Germany's forecast to 1.1 per cent from 1.8 per cent.
Interest rate futures indicated investors slightly scaled back their expectations for a rate hike this year.
India's December headline inflation fell to an 18-month low of 2.19 percent, well below the RBI's medium-term 4 percent target.