RBI ups FY22 CPI inflation outlook to 5.7%

The Reserve Bank of India (RBI) on Friday revised the FY22 Consumer Price Index (CPI) inflation outlook upwards to 5.7% from 5.1%. 

Announcing the Monetary Policy Committee (MPC) meet outcome, RBI Governor Shaktikanta Das said, "CPI inflation is projected at 5.7 % during 2021-22 - this consists of 5.9% in Q2, 5.3% in Q3 and 5.8% in Q4 of 2021-22 with risks broadly balanced. CPI inflation for the first quarter of 2022-23 is projected at 5.1%." 

The central bank's inflation projection had breached its upper band limit, increasing to 6.3% in May and 6.26% in June. The RBI has been mandated by the government to keep the CPI-based inflation at 4% with a margin of 2% on either side.

Also Read: RBI MPC outcome highlights: Central Bank maintains status quo on rates, says priority is to 'nurture growth'

During its last policy meet, the central bank had pegged the CPI at 5.1% for the financial year 2021-22. For July-September period, it was projected to be 5.4%.

Meanwhile, the RBI decided to keep benchmark interest rate unchanged at 4 per cent but maintained an accommodative stance as the economy is yet to recover from the impact of second COVID wave.

This is the seventh time in a row that the Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das has maintained status quo. RBI had last revised its policy rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting interest rate to a historic low.

Also Read: MPC meet: RBI retains GDP projection at 9.5% for FY22

MPC decided to maintain status quo, that is keeping benchmark repurchase (repo) rate at 4 per cent, Das said while announcing the bi-monthly monetary policy review.

Consequently, the reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.