Momentum of inflation on downward slope, says RBI Governor

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Photo source: PTI

The downward spiral of inflation, the RBI governor said

Highlights

  • Shaktikanta Das said on Monday that “the pace of inflation is declining.”
  • The RBI governor said the estimates were “strong” but relied on downsides and reverse risks.
  • The RBI considers a certain range in which crude prices can fluctuate.

Reserve Bank of India Governor Shaktikant Das on Monday said that “the pace of inflation is on a downward spiral” and that the central bank would strike a fine balance between the need to control inflation and ensure economic growth. The Reserve Bank’s inflation estimates, Das said, are “strong” but rely on the downsides and upward risks associated with the movement of global crude oil prices.

The RBI is considering a range in which crude prices are expected to fluctuate considering all the expected factors and which can be predicted as of today, he said.

He was responding to a question after a meeting of the RBI’s central board. Finance Minister Nirmala Sitharaman addressed the meeting.

“… our inflation forecast … I would say it’s pretty strong and we stand by it. If there’s something completely unexpected and you know, which no one can expect it’s different and we said it’s incidental. You know that The risk of loss or reverse of these estimates is the unrefined price, “the governor added.

He added that price stability, which means maintaining and adhering to inflation targets, must be “in our minds” and fully aware of the Reserve Bank’s commitment to inflation, keeping in mind its growth targets.

“… If you look at the pace of inflation, right from October, since last October, the pace of inflation has been on a downward slope,” Das said. He added that this is primarily a statistical factor that has led to high inflation, especially in the third quarter, and that the same base effect will play out in different ways in the coming months.

Last week, the RBI said that headline inflation would rise to the top of the tolerance band in the fourth quarter of 2021-22 and then moderate closer to the target in the second half of 2022-23, leaving room for monetary policy to remain consistent. .

The government has tasked the RBI to keep the Consumer Price Index (CPI) -based inflation at 2-6 per cent.

Read more: WPI inflation drops to 12.96 percent in January; Food prices are tough

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