NEW DELHI: Reserve Bank of India (RBI) Governor Shaktikanta Das shared significant insights during the Monetary Policy Committee (MPC) meeting, particularly regarding retail inflation for the financial year 2024-2025 (FY25).
The RBI has projected retail inflation to stabilise at 4.5 per cent, primarily attributed to a robust monsoon and favourable supply conditions.
The forecast reflects an optimistic outlook for the Indian economy, emphasizing the crucial interplay between agricultural performance and inflation dynamics.
Das highlighted the expectation of a decline in food inflation later in the fiscal year, supported by a solid stock of essential commodities and successful kharif sowing. This development would likely stabilize food prices and alleviate inflationary pressures.
Economic challenges
The MPC’s quarterly inflation estimates are noteworthy, projecting a range from 4.1 per cent in the second quarter to 4.8 per cent in the third quarter, and easing to 4.2 per cent in the final quarter. Such projections underscore the complexities of managing inflation amidst various economic challenges, including food price volatility and unfavorable base effects that may impact immediate consumer price index (CPI) metrics.
The Governor expressed cautious optimism regarding the inflation trajectory, stating that while retail inflation in September may experience an uptick due to a complicated base scenario, it has nonetheless been contained within the RBI’s tolerance band. He articulated a balanced view of macroeconomic indicators, acknowledging that while headline inflation trends downward, the pace remains uneven, necessitating vigilant monitoring.
Amidst these projections, the RBI opted to maintain the policy repo rate at 6.5 per cent for the tenth consecutive meeting, signifying a transition to a neutral monetary policy stance.
The shift suggests a potential for forthcoming rate cuts, aimed at fostering economic growth while acknowledging persistent inflationary risks due to external factors such as weather disturbances and geopolitical tensions.
Das reassured stakeholders of India’s resilient growth narrative, emphasising that despite recent declines in inflation rates, vigilance remains paramount due to inherent risks that could disrupt equilibrium.
