Price stability is crucial for achieving high growth in business, says Das | Business News

Reserve Bank of India Governor Shaktikanta Das has indicated the possibility of retail inflation dipping below 4% in the second quarter, emphasizing that ensuring price stability remains the central bank’s priority. Despite the success in the disinflation process so far, Das highlighted the vulnerability of the inflation trajectory to supply side shocks.

The RBI has projected a retail inflation of 4.5% in fiscal 2024-25, with estimates of 4.9% in Q1, 3.8% in Q2, 4.6% in Q3, and 4.5% in Q4. The government has mandated the RBI to keep retail inflation at 4% with a band of +/- 2%.

Das stressed the importance of retail inflation continuing to moderate and aligning with the target on a durable basis for the economy’s best interest. He noted favorable growth-inflation dynamics, with headline inflation easing to 5.1% in January and February 2024.

Looking ahead, Das highlighted the need for robust growth prospects to provide policy space to focus on inflation and ensure its descent to the 4% target. The Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 6.50% in the latest meeting, with a focus on withdrawal of accommodation.

Analysts anticipate a repo rate cut when retail inflation falls below 4%. Das emphasized the ongoing effort to ensure fuller transmission of policy actions and anchoring of household inflation expectations amidst ongoing volatility in food inflation.

Overall, the RBI remains committed to aligning inflation with the target and maintaining price stability in the economy.