RBI Monetary Policy: CPI inflation projected at 5.7% for FY23

The projection of global inflation is ratcheted up and has posed a risk of sizeable impact across geographies in global production. Amid the geopolitical tensions, cost pressure and supply chain disruptions are likely to linger on, explained Das.

The central bank's six-member MPC voted unanimously to retain the key policy rate - repo, at four percent and the reverse repo rate was also unchanged at 3.35 percent.

Repo is the rate at which the central bank lends short-term funds to banks, while the reverse repo is the rate at which the central bank borrows short-term funds from banks.

The MPC also retained the policy stance as ‘accommodative’ indicating that the rate-setting body is focused on boosting the economic growth.

Also Read: CPI inflation rises to 6.07% in February from 6.01% in January

The current RBI's policy statement was seen as the most crucial since the one announced by the banking regulator in March 2020 as after nearly three years, inflation is emerging as a bigger challenge than growth for the rate-setting panel.

India's headline inflation rate based on the CPI jumped to 6.07 percent in February 2022, as per data released by the National Statistical Office. At 6.07 percent, February's CPI inflation reading was the highest in eight months despite the unfavourable base effect wearing off, suggesting the presence of sequential price momentum.

The general index of the CPI was 0.2 percent higher in February compared to January, confirming that price pressures inched up. In January, CPI inflation had risen to 6.01 percent on the back of an unfavourable base effect. Inflation broke above the six percent upper end of the central bank’s comfort zone for the second successive month.