Monday, June 26, 2023

Aim for 4% inflation reduction, but El Nino will be a challenge: Governor of the Reserve Bank of India Das

 MUMBAI: Shaktikanta Das, governor of the Reserve Bank of India, has stated that the central bank will endeavor to achieve its 4% target for headline inflation, but El Nino poses a challenge. According to Das, the RBI had previously predicted that the economy would expand by 6.5 percent in FY24.

According to Das, inflation has decreased to 4.25 percent in May from a peak of 7.8 percent in April of last year as a result of the central bank raising rates by a cumulative 2.5 percent since May of that year and government supply-side measures.

"On the inflation front, we remain vigilant. "We will continue to strive to bring inflation down to 4%," he added. "We expect inflation to be at 5.1% in FY24."

Das stated that interest rates have a direct relationship with inflation and that the RBI can cut interest rates if retail inflation stays below 4% for a long time.

Das stated that commodity prices shot up as a result of the Ukraine war, which also caused inflation to rise. However, he added that crude oil prices are no longer a concern from an inflation standpoint now that they are at $76 a barrel

The governor stated that the Food Corporation of India's release of wheat and rice stocks has also contributed to lower food inflation. He added that targeted reductions in duties on particular goods have also contributed.

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