Business
El Nino: Aim to reduce inflation to 4%, but El Nino a challenge: Reserve Bank of India governor Das
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MUMBAI: Reserve Bank of India governor Shaktikanta Das has said the central bank will strive to get headline inflation to its 4% target but flagged El Nino as a challenge to its efforts. Das said that that the economy will grow at 6.5% in FY24, as estimated by the RBI earlier.
The central bank’s rate hikes by a cumulative 2.5% since May last year, coupled with supply-side measures from the government, have helped get the inflation down to 4.25% in May from a peak of 7.8% in April last year, Das said.
“We continue to be watchful on the inflation front. We expect inflation to be at 5.1% in FY24, and we will continue to strive and get it down to 4%,” he added.
On the high borrowing costs, Das said interest rates have a direct relation with inflation, and the RBI can cut interest rates if retail inflation cools down to 4% or thereabouts on a durable basis.
Das said that the Ukraine war, which led to a shoot-up in the commodity prices, led to a surge in inflation, but added that crude prices are not a concern from an inflation perspective now as they’ve come down to $76 a barrel.
Food inflation has also come down, the governor said, adding that measures like the Food Corporation of India releasing wheat and rice stocks have also helped. Targeted cuts in duties on certain products have also helped, he added.
The central bank’s rate hikes by a cumulative 2.5% since May last year, coupled with supply-side measures from the government, have helped get the inflation down to 4.25% in May from a peak of 7.8% in April last year, Das said.
“We continue to be watchful on the inflation front. We expect inflation to be at 5.1% in FY24, and we will continue to strive and get it down to 4%,” he added.
On the high borrowing costs, Das said interest rates have a direct relation with inflation, and the RBI can cut interest rates if retail inflation cools down to 4% or thereabouts on a durable basis.
Das said that the Ukraine war, which led to a shoot-up in the commodity prices, led to a surge in inflation, but added that crude prices are not a concern from an inflation perspective now as they’ve come down to $76 a barrel.
Food inflation has also come down, the governor said, adding that measures like the Food Corporation of India releasing wheat and rice stocks have also helped. Targeted cuts in duties on certain products have also helped, he added.
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