In February, consumer price index-based inflation (CPI) was 6.44 percent, compared to 6.52 percent in January.
Digital Desk: To combat rising inflation, the Reserve Bank of India is expected to raise policy rates by 25 basis points (bps) at its current monetary policy committee (MPC) meeting. On April 3, 5, and 6, the RBI MPC convened for three days to review domestic and global concerns before issuing the first bi-monthly monetary policy for 2023-24.
The group, led by RBI Governor Shaktikanta Das, is said to have discussed high retail inflation as well as recent actions by central banks such as the US Federal Reserve, the European Central Bank, and the Bank of England. To combat inflation, the Reserve Bank has already hiked policy rates by 250 basis points since May of last year.
Despite this, inflation has remained above the RBI's 6% target for the majority of the time, with the exception of November and December 2022. In February, consumer price index-based inflation (CPI) was 6.44 percent, compared to 6.52 percent in January.
"Given that CPI inflation has been 6.5% and 6.4% in the last two months, and liquidity is now near neutral," Madan Sabnavis, Chief Economist at Bank of Baroda, recently stated.
Unseasonal rains are expected to have a negative influence on food prices, while OPEC and its partners' decision to cut output has also supported oil prices. Core inflation, excluding volatile food and energy components, is likewise expected to be in the 6.05 to 6.12 percent range.
"The policy space to focus on inflation is lent by domestic growth conditions holding up, supported by urban consumption and services sector recovery," Gaura Sen Gupta, an economist with IDFC FIRST Bank, was reported by Reuters as saying.
In fiscal years 2023-24, the central bank will hold six MPC meetings. The government has directed the RBI to keep retail inflation at 4%, with a 2% cushion on either side.
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