Inflation To Remain Above 5% Throughout 2023-2024, Says RBI

The Reserve Bank of India (RBI) announced its decision on key policy rates today following the conclusion of its three-day Monetary Policy Committee (MPC) meeting headed by Governor Shaktikanta Das.

The RBI lowered its inflation forecast for the financial year 2023-24 to 5.1 per cent from an earlier estimate of 5.2 per cent.

“A durable disinflation in core inflation would be critical for a sustained alignment of the headline inflation with the target. CPI inflation forecast for 2023-24 cut to 5.1% from 5.2%,” Governor Das said.

The RBI decided to keep its key policy rate unchanged at 6.5% for the second consecutive time. The decision was taken as inflation has moderated in recent months.

The RBI started raising interest rates in May 2022 in an effort to control inflation. Since then, the RBI has raised the repo rate by 250 basis points in six consecutive hikes.

Governor Das announced that headline inflation remains above the RBI’s target of 4% and is expected to remain so for the rest of the year.

Retail inflation has remained below the RBI’s target of 6 per cent for the past two years, Governor Das said, adding that the GDP growth in Q1 this financial year is expected at 8 per cent.