The RBI on Wednesday retained its inflation forecast for the current fiscal at 6.7 per cent. The central bank’s target for CPI-based inflation is 2-6 percent. India’s retail inflation eased to a three-month low of 6.77 per cent in October. However, this was the 10th consecutive month when consumer price index (CPI) based inflation remained above the RBI’s upper tolerance limit of 6 per cent.
However, the RBI has revised down its retail inflation forecast to 6.6 per cent and 5.9 per cent for Q3FY23 and Q4FY23, respectively. The RBI is expected to bring down CPI inflation to 5 per cent and 5.4 per cent in Q1 FY24 and Q2 FY24 respectively.
Presenting the latest bi-monthly monetary policy statement, RBI Governor Shaktikanta Das on Wednesday said, “There will be no let up in our efforts to bring down inflation, moving closer to the 4 per cent target.”
He said that core inflation remains stable and high. “The biggest risks to the outlook are from geopolitics, global recession, global monetary tightening.”
Das said inflation for FY23 is expected to be 6.7 per cent, assuming an average of $100 a barrel for crude oil.
In September, India’s retail inflation touched a five-month high of 7.41 per cent. Earlier, retail inflation was 7.04 per cent in May, 7.01 per cent in June, 6.71 per cent in July and 7 per cent in August.
In the fifth consecutive hike this year, the RBI’s monetary policy committee on Wednesday raised the repo rate by 35 basis points (bps) to 6.25 per cent with immediate effect, making loans costlier. The policy rate is now at the highest level since August 2018. RBI has maintained the policy stance on ‘withdrawal of accommodation’.
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