MUMBAI, June 16 Reuters India39;s domestic macroeconomic conditions have improved further despite the downside risks posed to global growth from commoditydriven inflation, its central bank said on Thursday.

Domestic economic activity has been gaining traction in spite of formidable headwinds from external developments, the Reserve Bank of India RBI said in its monthly bulletin.

Gross domestic product GDP for 202122 surpassed its prepandemic 201920 level by 1.5 and activity is gaining strength in 202223 so far as gauged from high frequency indicators, it added.

India39;s current yield curve indicates an improvement in its longterm growth prospects and an upturn in forecast inflation expectations, it said.

At the same time, the fact that the yield curve has become steeper and concave reconfirms expectations of tighter monetary policy in the period ahead, the report added.

The RBI said the first impact of the food and fuel price shock to inflation lay outside its remit. Food and fuel prices constitute 60 of Indian CPI, but upward pressure on food prices is now coming from external sources such as the war in Ukraine.

However, RBI inaction could foster a perception that inflation is getting out of control, it added. The RBI this month raised rates by 50 basis points after a 40 bps hike in May.

RBI39;s actions will cause inflation other than that related to food and fuel, or what is called core inflation, to ease and this will bring down headline inflation, it said….