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Inflation may ease gradually, precluding chances of hard landing, says RBI Guv

Jul 09, 2022 / 12:44 PM IST

The current era is one of globalisation of inflation amidst growing deglobalisation of world trade, the RBI governor said on July 9.

RBI Governor Shaktikanta Das.

Inflation is expected to ease gradually in the second half of fiscal year 2022-23, lowering the likelihood of a hard landing for the economy, the governor of the Reserve Bank of India said on July 9.

“At this point of time, with the supply outlook appearing favourable and several high frequency indicators pointing to resilience of the recovery in the first quarter (April-June) of 2022-23, our current assessment is that inflation may ease gradually in the second half of 2022-23, precluding the chances of a hard landing in India,” Shaktikanta Das said at the Kautilya Economic Conclave.

India’s pandemic-hit economy is seeing a recovery but inflation has remained above the central bank’s tolerance ceiling for several months amid the surge in global food and commodities. The RBI has since early May raised its policy repo rate by 90 basis points to 4.9 percent. The central bank’s rate setting panel is widely expected to raise policy rates again when it meets in early August as the key price gauge is expected to remain outside target for three quarters in a row.

The current era is one of globalisation of inflation amidst growing deglobalisation of world trade, the RBI governor said on July 9.

While factors beyond control may affect inflation in the short run, the medium term trajectory is determined by monetary policy.

“Therefore, monetary policy must take timely actions to anchor inflation and inflation expectations so as to place the economy on a strong and sustainable growth pedestal,” he said, reiterating the central bank’s policy stance.