The retail inflation for FY 2024-25 is projected at 4.5 percent, assuming a normal monsoon and stable supply conditions, announced Reserve Bank of India (RBI) Governor Shaktikanta Das, on Wednesday.
The Monetary Policy Committee (MPC) projected CPI inflation for FY 2024-25 at 4.5 percent, with quarterly estimates of 4.1 percent for Q2, 4.8 percent for Q3, and 4.2 percent for Q4. The CPI forecast for Q1 of 2025-26 is set at 4.3 percent.
The central bank has maintained the status quo on repo rates during the October policy meeting, keeping it unchanged despite the recent 50 basis points rate cut by the US Federal Reserve. Additionally, the RBI has shifted its policy stance from "withdrawal of accommodation" to "neutral," signaling a more balanced approach in managing inflation and supporting growth going forward.
Das stated that food inflation is expected to decrease later in the year, supported by a good monsoon and an adequate buffer stock of essential commodities. This would help stabilise food prices and ease inflationary pressures in the economy.
As per the Governor, "Food inflation could see some easing later in this fiscal on back strong kharif sowing, adequate buffer and good soil conditions". "Retail inflation in September likely to see big jump due to unfavourable base, pick up in food price momentum," said Das.
Catch live updates from RBI Governor Shaktikant Das' address here.
He further noted, "Inflation horse has been brought to the stable within the tolerance band. Have to be careful about opening the gate". "The MPC noted that currently, macroeconomic parameters of inflation and growth are well balanced. Headline inflation is on a downward trajectory, though its pace has been slow and uneven," added Das.
The government has tasked the RBI with maintaining Consumer Price Index (CPI) based retail inflation at 4 percent, allowing a margin of 2 percentage points on either side.
This is the first RBI policy announcement following the Federal Reserve's recent 50 basis point cut to its benchmark rate.
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