Headline inflation is projected to fall from 6.7% in 202223 to 5.4% in 202324 but it remains prone to food price shocks, says
RBI Governor Das; Developments in West Asia have added to the litany of challenges for the global economy, he observes
Even though CPI inflation has been
projected at 5.4%
for 202324 by the Monetary Policy Committee
(MPC), a moderation from
6.7% in 202223, headline
inflation remains vulnerable to recurring and overlapping food price shocks,
Reserve Bank of India (RBI)
Governor Shaktikanta Das
said in Tokyo on Thursday.
“Core inflation has also
moderated by 170 basis
points since its recent peak
in January 2023. But in
these circumstances, monetary policy remains
watchful and actively disinflationary to progressively
align inflation to the target,
while supporting growth,”
he said. Stating that the
global economy continued
to face multiple macroeconomic and geopolitical
shocks.
Mr. Das said the
prediction of a global recession had not come true
but there were indications
that global growth was
slowing down amid tightening financial conditions
and still elevated inflation.
“Even as the fallouts of
the pandemic, the war in
Ukraine and the unprecedented tightening of monetary policy reverberate
across the world, the recent developments in West
Asia have added to the litany of challenges for the global economy,” he said.
“Policymaking in this
scenario becomes extremely challenging with
difficult tradeoffs —
growth versus inflation;
price stability versus financial stability; and current
exigency versus future sustainability.
There is always
a risk of doing too little or
doing too much,” he emphasised. The RBI Governor told the gathering that
it was a matter of satisfaction that the Indian economy had sailed through turbulent waters smoothly
during recent years.
“Growth is getting a
stronger foothold while inflation is also coming under control. Our economic
performance also owes a
lot to the very calibrated
and targeted monetary
and fiscal responses since
the pandemic,” he said.
