Inflation Expected To Ease In 2nd Half Of FY 2022-23, Says RBI Governor Shaktikanta Das

In order to achieve strong and sustained growth, the central bank would continue to implement monetary measures to anchor inflation, RBI Governor Shaktikanta Das said on Saturday. He exuded optimism that the price situation will gradually improve in the second half of the current fiscal.

Speaking at the first Kautilya Economic Conclave, Das stated that inflation is a gauge of the public's faith in the nation's economic institutions.

Retail inflation has now exceeded the Reserve Bank of India's upper tolerance limit of 6% for five consecutive months. The domestic wholesale inflation rate, excluding this, has been in the double digits for more than a year.

The RBI's current mandate is to maintain retail inflation at 4% with a tolerance band of 2%, or 200 basis points, on either side.

According to a news daily, Shaktikanta Das said, "The inflationary pressures occurred even as there was unprecedented damage inflicted by the pandemic on economic activity - real GDP contracted by a humungous 23.8 per cent in the first quarter of 2020-21 and by as much as 6.6 per cent in the full financial year 2020-21."

Shaktikanta Das highlighted that the Monetary Policy Committee (MPC) in April and June meetings raised the inflation projection for 2022-2023 in two stages to 6.7%, taking into account the changing dynamics and the generalisation of inflation pressures.

According to him, geopolitical effects on food prices accounted for around three-fourths of the revision in June. He also noted that the MPC chose to raise the policy repo rate by 40 bps and 50 bps in May and June, respectively.

When discussing the prospects for global growth, Das stated that there are major negative risks in the near term due to the significantly tightening financial conditions brought on by the ongoing normalisation of monetary policy and the persistent geopolitical tensions.