RBI Governor Shaktikanta Das keeps repo rate unchanged at 4 per cent in MPC meeting
RBI Governor Shaktikanta Das said the Reserve Bank of India (RBI) is laser focused to bring retail inflation back to four per cent in a non-disruptive manner, according to the minutes of the October Monetary Policy Meeting (MPC). Issued today.
The central bank has been mandated by the government to ensure that consumer price index (CPI) based inflation is at 4 per cent, with a band of two per cent on either side. Retail inflation – which was above 6 per cent during May and June, has now started going down and has come down to 4.35 per cent in September 2021.
“Going forward, if there is no unseasonal rains, food inflation is likely to record a significant moderation in the immediate term, aided by record kharif production, more than adequate food stocks, supply-side measures and favorable base effects,” RBI governor said.
Volatile crude oil prices, particularly the resurgence since mid-September, are pushing pump prices to new highs, increasing the risk of higher transportation costs spreading further into retail prices of goods and services. They said.
In its August 2021 meeting, the RBI panel was faced with challenges by headline inflation exceeding the upper tolerance limit for the second consecutive month. The softer-than-expected inflation in July and August this year was on account of a significant moderation in the pace of food prices, especially in August.
“The trajectory of inflation is uneven, sluggish and likely to halt,” RBI Deputy Governor Michael Patra said.
“Inflation estimates happily outweighed actual results in the form of a decline in food inflation.
Inflation formation is being impacted by repeated shocks, which have taken fuel inflation to an all-time high and core inflation remains persistent, with risks,” Mr. Patra said.
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