"Monetary policy: RBI leaves inflation projection for FY24 unchanged at 5.4%, but price pain remains major risk"

"Monetary policy: RBI leaves inflation projection for FY24 unchanged at 5.4%, but price pain remains major risk"

• By Staff Writer

"The Reserve Bank of India (RBI) has maintained its inflation forecast for the fiscal year at 5.4%, despite concerns over uneven monsoons and rising global crude oil prices. The RBI's Monetary Policy Committee has kept the key lending rate unchanged at 6.5%, with a focus on withdrawing accommodation. The inflation outlook is uncertain due to factors such as lower oil reserves, volatile global food and energy prices, and the impact of El Nino. The RBI aims to bring inflation down to 4% and will closely monitor risks, including global supply shocks."

"India’s central bank today left its inflation forecast for this fiscal year unchanged at 5.4%, despite uneven monsoon showers and as outlook on food prices remain on edge amid a spike in global crude oil prices"

The overall inflation outlook, however, is clouded by uncertainties from the fall in kharif sowing for key crops like pulses and oilseeds, low reservoir levels, and volatile global food and energy prices. The MPC observed that the recurring incidence of large and overlapping food price shocks can impart generalisation and persistence to headline inflation," RBI Governor and MPC Chair Shaktikanta Das said while announcing the policy decisions.

"Inflation trajectory will be shaped by El Nino and global food and energy prices and together with global financial market volatility, these factors pose risks to the outlook, he added. The central bank has identified high inflation as a major risk to macroeconomic stability and sustainable growth."

"The RBI is determined to bring down inflation to 4% and will remain watchful of risks as more frequent global supply shocks can have profound implications on the management of the price situation, Das had said earlier last month.

Policymakers had also said the key to rein in the inflation rate to control food prices and domestic supplies must go up"