New Delhi: Consistently high inflation remains a major policy concern for Reserve BankWhich has aggressively hiked rates so far this year, but the pressure could ease in the next fiscal given normal rains and normalization of global supply chains without any external shocks. reserve Bank of India report good.
reserve Bank of India (RBI) expects retail inflation to come under control at 5.2 per cent in the next financial year starting April, down from 6.7% projected for the current year.
RBI in its ‘Monetary Policy Report September 2022’ said, “For 2023-24, assuming a normal monsoon, progressive normalization of supply chains, and no further exogenous or policy shocks, structural model projections indicate that inflation averages will be 5.2%.”
The central bank is mandated to keep retail inflation in the range of 2-6%.
However, inflation has remained above the RBI’s upper tolerance level since January 2022, mainly on account of unfavorable supply shocks amid geopolitical tensions emanating from the Russo-Ukraine war since late February.
Both countries are major suppliers of food grains, edible oils, fertilizers and energy resources such as crude oil and natural gas.
The central bank said in the report that inflation has moderated from its peak of 7.8 per cent in April, but remains at unacceptably high levels.
To bring inflation under control, the Reserve Bank on Friday increased the key repo rate from 0.50% to 5.90%. During the May-August period of this fiscal, it increased the policy repo rate by 140 basis points, or 1.4%.
six members monetary policy committee ,MPC) met four times during April-September 2022, including an off-cycle meeting in May, in the backdrop of the sharp jump in global commodity prices and uncertainties around the pace of global monetary policy normalization.
RBI Governor Shaktikanta DasoAnnouncing the policy, said that the world has already witnessed two major shocks of the pandemic and the Ukrainian situation in the last two and a half years and the third blow comes in the form of aggressive monetary policy action by central banks globally.
RBI expects inflation to remain above the upper tolerance level of 6% during the first three quarters (till December) of 2022-23 and expects it to come under control by January 2023.
For the January-March quarter of 2022-23, it has forecast retail inflation to average 5.8% in the April-June 2023-24 period and further reduce to 5%.
Even though the forecast for the next fiscal looks pleasing, upside risks remain on a number of factors, such as further escalation of geopolitical tensions, crude oil and commodity prices, longer than expected supply chain disruptions and global warming. Increase in financial market volatility. monetary policy action.
Slowdown in domestic kharif crop production, unseasonal rains or strong demand could also add to the upside risk.
“Early resolution of geopolitical tensions could pose downside risks,” the RBI report said.
Further improvement in global commodity prices on account of easing global demand, and an improvement in supply conditions coupled with easing of the pandemic will help bring down inflation.
According to the International Monetary Fund (IMF), global economic growth is expected to slow to 3.2% in 2022 from 6.1% in 2021, while the outlook is “gloomier and more uncertain”, with risks looming downwards.
On the other hand, it expects global consumer price inflation to rise to 8.3% this calendar year, as against 4.7% in 2021.
RBI has reduced India’s GDP growth forecast for this financial year to 7% from its earlier estimate of 7.2%.
reserve Bank of India (RBI) expects retail inflation to come under control at 5.2 per cent in the next financial year starting April, down from 6.7% projected for the current year.
RBI in its ‘Monetary Policy Report September 2022’ said, “For 2023-24, assuming a normal monsoon, progressive normalization of supply chains, and no further exogenous or policy shocks, structural model projections indicate that inflation averages will be 5.2%.”
The central bank is mandated to keep retail inflation in the range of 2-6%.
However, inflation has remained above the RBI’s upper tolerance level since January 2022, mainly on account of unfavorable supply shocks amid geopolitical tensions emanating from the Russo-Ukraine war since late February.
Both countries are major suppliers of food grains, edible oils, fertilizers and energy resources such as crude oil and natural gas.
The central bank said in the report that inflation has moderated from its peak of 7.8 per cent in April, but remains at unacceptably high levels.
To bring inflation under control, the Reserve Bank on Friday increased the key repo rate from 0.50% to 5.90%. During the May-August period of this fiscal, it increased the policy repo rate by 140 basis points, or 1.4%.
six members monetary policy committee ,MPC) met four times during April-September 2022, including an off-cycle meeting in May, in the backdrop of the sharp jump in global commodity prices and uncertainties around the pace of global monetary policy normalization.
RBI Governor Shaktikanta DasoAnnouncing the policy, said that the world has already witnessed two major shocks of the pandemic and the Ukrainian situation in the last two and a half years and the third blow comes in the form of aggressive monetary policy action by central banks globally.
RBI expects inflation to remain above the upper tolerance level of 6% during the first three quarters (till December) of 2022-23 and expects it to come under control by January 2023.
For the January-March quarter of 2022-23, it has forecast retail inflation to average 5.8% in the April-June 2023-24 period and further reduce to 5%.
Even though the forecast for the next fiscal looks pleasing, upside risks remain on a number of factors, such as further escalation of geopolitical tensions, crude oil and commodity prices, longer than expected supply chain disruptions and global warming. Increase in financial market volatility. monetary policy action.
Slowdown in domestic kharif crop production, unseasonal rains or strong demand could also add to the upside risk.
“Early resolution of geopolitical tensions could pose downside risks,” the RBI report said.
Further improvement in global commodity prices on account of easing global demand, and an improvement in supply conditions coupled with easing of the pandemic will help bring down inflation.
According to the International Monetary Fund (IMF), global economic growth is expected to slow to 3.2% in 2022 from 6.1% in 2021, while the outlook is “gloomier and more uncertain”, with risks looming downwards.
On the other hand, it expects global consumer price inflation to rise to 8.3% this calendar year, as against 4.7% in 2021.
RBI has reduced India’s GDP growth forecast for this financial year to 7% from its earlier estimate of 7.2%.