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RBI Policy: MPC raises H1FY21 inflation projection to 5-5.4% from 3.8-4%

For the second half of 2020-21, inflation is estimated at 3.2 percent.

February 06, 2020 / 04:36 PM IST

The Monetary Policy Committee (MPC) has hiked its retail inflation outlook for H1FY21 to 5-5.4 percent.

In the previous policy review, the Reserve Bank of India's (RBI) MPC projected inflation at 3.8-4 percent in the first half of FY21.

Follow our Live Blog for updates on the MPC meeting

For the third quarter of 2020-21, inflation is estimated at 3.2 percent.

Retail inflation, measured as Consumer Price Index (CPI), is pegged at 6.5 percent in Q4 (January to March quarter) of the current fiscal year.

Full text of the MPC statement

"Food inflation is likely to soften from the high levels of December and the decline is expected to become more pronounced during Q4 2019-20 as onion prices fall rapidly in response to arrivals of late kharif and rabi harvests.," the MPC said in the statement.

Overall, the inflation outlook remains "highly uncertain", the MPC added.

The MPC also noted that inflation excluding food and fuel needs to be monitored. Some factors that could influence inflation are revisions in mobile phone charges, the increase in prices of drugs and pharmaceuticals and the impact of new emission norms

"The MPC will remain vigilant about the potential generalisation of inflationary pressures as several of the underlying factors cited earlier appear to be operating in concert," the commitee said in the statement.

Members of the MPC voted unanimously to keep the repo rate unchanged at 5.15 percent.
Moneycontrol News
first published: Feb 6, 2020 12:18 pm