The Reserve Bank of India (RBI) aims to bring down retail inflation to its medium-term target of 4 per cent within two years, according to Governor Shaktikanta Das.
In an interview with a TV channel, Das emphasised that retail inflation has moderated from the peak and the central bank will approach the 4 per cent inflation target in a steady manner without much of a growth sacrifice.
The RBI has projected retail inflation at 6.7 per cent in 2022-23 with Q2 (July-September) at 7.1 per cent; Q3 (October-December) at 6.4 per cent; and Q4 (January-March) at 5.8 per cent, with risks evenly balanced. CPI inflation for Q1 FY24 has been projected at 5.0 per cent.
It has projected the real GDP growth for FY23 at 7.2 per cent, with Q1 at 16.2 per cent; Q2 at 6.2 per cent; Q3 at 4.1 per cent; and Q4 at 4.0 per cent, with risks broadly balanced. Real GDP growth for Q1 FY24 has been projected at 6.7 per cent.
The Governor observed that inflation expectations are increasingly getting anchored, and domestic inflation has peaked with a likely moderation, going forward. However, there is no room for complacency, with the RBI remaining watchful on price pressures, particularly from global factors.
Das underscored that bond yields at the long end are reflecting the anchoring of inflation expectations. Further, softening crude and commodity prices are also supportive.
The RBI’s rate-setting monetary policy committee has upped the policy repo rate cumulatively by 140 basis points since May 2022 from 4 per cent to 5.40 per cent in three stages to tackle the spillovers from geopolitical shocks, which are imparting considerable uncertainty to the inflation trajectory.