The Reserve Bank of India (RBI) led by Governor Shaktikanta Das, is addressing its failure to maintain inflation within its tolerance band of 2-6% for three consecutive quarters, in accordance with Section 45ZN of the RBI Act, 1934 and Regulation 7 of RBI MPC and Monetary Policy Process Regulations, 2016. A plan has been initiated to lower inflation to 4% over the next two years.
This action was triggered by the Consumer Price Index (CPI) inflation print of 7.41% in September 2022, which exceeded the target range. In response, the RBI outlined a series of remedial actions, including a policy repo rate hike to 6.5%. This measure was supported by Jayanth Varma of the Monetary Policy Committee (MPC).
Despite inflation being above the target for four full years, the RBI is optimistic about future trends. The institution forecasts an average inflation rate of 4.3% by early 2025, with potential dips below 4% in the July-September quarter of 2024.
Governor Das acknowledged the global and domestic uncertainties impacting these predictions but remained confident in their strategy. He asserted that they are halfway there and will reach their target, indicating a positive outlook for India's inflation management.
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