RBI’s Monetary Policy: Shaktikanta Das Predicts 5.1% Inflation for FY24
Written by Sanjay Kumar
In a consecutive decision, RBI Governor Shaktikanta Das announced on Thursday (June 8) that the repo rate would be maintained at 6.5 percent. Further Governor Das added, “Uncertainty on the future course of monetary policy remains as inflation is still high”. Headline inflation is easing but rules above target, Das added.
“MPC voted unanimously to leave the repo rate unchanged at 6.5%. MPC voted 5 members to 1 to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target,” Shaktikanta Das said.
“Consequently, the Standing Deposit Facility (SDF rate) remains at 6.25% and the marginal standing facility and the bank rates stand at 6.75%,” he added.
On Thursday, Governor Das projected a GDP growth rate of 7.2% and an inflation rate of 5.1% for FY24. Looking specifically at the fiscal year 2024, the projected real GDP growth is set at 6.5%. In terms of quarterly estimates, Governor Das anticipated a GDP growth rate of 8% in Q1, followed by 6.5% in Q2, 6% in Q3, and 5.7% in Q4.
The headline Consumer Price Index (CPI) inflation rate dropped to 4.8% in April 2023. Notably, CPI inflation eased across various sectors, including food, fuel, and coal. For FY2024, the RBI Governor projected a headline inflation rate of 5.1% for FY2023. Additionally, the inflation estimates for the respective quarters of FY2024 were presented as follows: 4.6% in 1Q, 5.2% in 2Q, 5.5% in 3Q, and 5.2% in 4Q.
During the MPC meeting held in April, the RBI projected an inflation rate of 5.2% for FY24, along with a real GDP growth rate of 6.5 percent.
What is inflation rate?
The inflation rate refers to the percentage change in the general price level of goods and services over a specified period, typically a year. It is a measure of how much the average prices of goods and services in an economy have increased or decreased during that time. Inflation is often expressed as an annual percentage and is commonly calculated using various price indices, such as the Consumer Price Index (CPI) or the Wholesale Price Index (WPI).
High inflation erodes the purchasing power of money, while low inflation or deflation may have its own economic implications. Central banks and governments closely monitor and manage inflation to ensure price stability and sustainable economic growth.
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