RBI cuts inflation projection for FY24 to 5.1%

RBI Monetary Policy Committee Meet 2023: The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has marginally lowered its inflation forecast for FY24 from 5.2 per cent to 5.1 per cent, governor Shaktikanta Das said on Thursday.

The RBI MPC now sees inflation for the first quarter (April-June) of this fiscal at 4.6 per cent, 5.2 per cent for the second quarter (July-Sept), 5.4 per cent for the third quarter (Oct-Dec) and 5.2 per cent for the fourth quarter (Jan-March), Das said.

In the previous MPC meeting held in April, the RBI had forecast first quarter inflation at 5.1 per cent, second quarter at 5.4 per cent, third quarter at 5.4 per cent and fourth quarter at 5.2 per cent.

In India, Consumer Price Inflation (CPI) eased during March-April 2023 and moved into the tolerance band, declining from 6.7 per cent in 2022-23. However, headline inflation is still above the target and is expected to remain so according to our projections for 2023-24, Das noted. He added that inflation will remain above 4 per cent throughout 2023-24.      

As per the Governor, retail inflation has been below the upper band of 6 per cent for the last two years. "Taking into account all factors and assuming a normal monsoon, CPI headline is projected at 5.1 per cent for 2023-24," he said.

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He also outlined that the goal is to reach the targeted 4 per cent inflation going forward. "Our monetary policy actions are yielding desired results giving us space to keep rates unchanged in this meeting," Das added.

Meanwhile, the repo rate has been kept unchanged by RBI at 6.5 per cent.

"MPC decides to keep repo rate unchanged at 6.5 per cent, Standing Deposit Facility Rate remains at 6.25 per cent. Marginal Standing Facility Rate and Bank Rate unchanged at 6.75 per cent," said Das on Thursday.

The RBI Governor projected GDP growth for 2023-24 at 6.5 per cent. The projection remains the same as the previous MPC statement that pegged growth for the year at 6.5 per cent.

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