The Reserve Bank of India (RBI) has revised upwards retail inflation projection for FY 22 to 5.7 per cent from 5.1 per cent, even as it retained real GDP projection at 9.5 per cent.
The revised quarterly retail inflation projections are: 5.9 per cent in Q2 (5.4 per cent earlier projection); 5.3 per cent in Q3 (4.7 per cent); and 5.8 per cent in Q4 (5.3 per cent) of 2021-22.
“Since the start of the pandemic, the Monetary Policy Committee (MPC) has prioritised revival of growth to mitigate the impact of the pandemic. The available data point to exogenous and largely temporary supply shocks driving the inflation process, validating the MPC’s decision to look through it,”RBI Governor Shaktikanta Das said.
The Governor observed that supply-side drivers could be transitory while demand-pull pressures remain inert, given the slack in the economy.
He emphasised that a pre-emptive monetary policy response at this stage may kill the nascent and hesitant recovery that is trying to secure a foothold in extremely difficult conditions.