RBI MPC: FY25 CPI inflation projection retained at 4.5%

Reserve Bank of India

The Reserve Bank of India on June 7 retained the inflation forecast for FY25 at 4.5 percent as CPI headline inflation softened further in March-April but food prices remained high.

India's consumer price index (CPI)-based inflation eased to an 11-month low of 4.83 percent in April from 4.85 percent in the previous month but food inflation remained stubbornly high at 8.7 percent.

The RBI’s six-member monetary policy committee (MPC) expects inflation at 4.9 percent in the first quarter, 3.8 percent in the second, 4.6 percent in the third and 4.5 percent in the final quarter of the current financial year.

"...The inflation growth balance is moving favourably. Growth is holding firm. Inflation continues to moderate, mainly driven by the core component, which reached its lowest level in the current series in April 2024,” the RBI governor said.

Food inflation, however, remains elevated. While the MPC took note of the disinflation achieved, so far, without hurting growth, it remains vigilant to any upside risks to inflation, particularly from food inflation, which could derail the path of disinflation, Das said.

“Hence, monetary policy must continue to remain disinflationary and be resolute in its commitment to aligning inflation to the target of 4 percent on a durable basis,” he said.

The central bank left the key repo rate, the rate at which the RBI lends to banks, unchanged at 6.5 percent for the eighth time.

The MPC also stuck to "withdrawal of accommodation" stance to ensure anchoring of inflation expectations and fuller policy transmission.