Monetary policy: RBI leaves inflation projection for FY24 unchanged at 5.4% amid food price concerns
The Reserve Bank of India left the inflation aim unchanged at 5.4%. In the August policy, the RBI had raised its FY24 inflation forecast to 5.4% from 5.1%.
The Reserve Bank of India's (RBI) Monetary Policy Committee unanimously decided to keep the repo rate- key lending rate- unchanged at 6.5% for the fifth time in a row.
The rate-setting panel also left the policy stance unchanged with focus on withdrawal of accommodation.
«There has been broad based easing in core inflation, which is indicative of successful disinflation through monetary policy actions. The near-term outlook however is masked by risks to food inflation, which might lead to an inflation uptick in November and possibly in December,» RBI Governor and MPC Chair Shaktikanta Das said while announcing the policy decisions.
«This needs to be watched for second-round effects, if any,» he added.
Inflation outlook would be considerably influenced by food prices, Das said.
The central bank now sees inflation for Q3 and Q4 at 5.6% and 5.2%, respectively. In October policy, the central bank had forecast Q3 inflation at 5.6% and Q4 at 5.2%.
For the next fiscal year, inflation is pegged at 5.2% in the first quarter, 4% in Q2 and 4.7% in Q3. The risks are evenly balanced, Das said.
“Inflation is expected to increase to 5.9% in November and remain above 5.5% over the next 1-2 months due to elevated cereals, pulses and onion prices.
Lingering inflation risks warrant the hawkish stance of the RBI,” said Sakshi Gupta, principal economist at HDFC Bank.
Shaktikanta Das has often repeated that the RBI is determined to bring down inflation to 4%. Last month, he expanded the scope of his frequently cited 'Arjuna' analogy to convey that Mint Road takes into account
