Exuding confidence of a gradual improvement in the price situation in the second half of the current financial year, RBI Governor Shaktikanta Das on Saturday said the central bank will continue to take monetary measures to anchor. inflation With a view to achieving strong and sustainable development.
Speaking at the inaugural Kautilya Economic Conference, Das said that inflation is a measure of public confidence and confidence in the economic institutions of the country.
“Overall, at this juncture, the supply outlook looks favorable and with several high-frequency indicators pointing to recovery flexibility in Q1 (April-June) of 2022-23, our current assessment is that inflation is gradually slowing down. may decrease. The second half of 2022-23, excluding the possibility of a hard landing in India,” the governor said.
Noting that price stability is important for maintaining macroeconomic and financial stability, he said the central bank will take measures to maintain and promote macroeconomic stability.
“While factors beyond our control may influence inflation in the short run, its trajectory in the medium term is determined by monetary policy. Therefore, monetary policy must take timely action to stabilize inflation and inflation expectations so that To put the economy on the pedestal of a strong and sustainable development.
“We will continue to examine our policies with the broader goal of maintaining and promoting macroeconomic stability,” he said.
Das said that monetary policy committee (MPC) in its April and June meetings revised the inflation forecast for 2022-23 to 6.7 per cent in two phases to take stock of the evolving developments and normalize inflationary pressures.
About three-fourth of the revision in June was due to geopolitical spillover to food prices, he said, adding that the MPC also decided to extend the policy repo rate 40 bps and 50 bps in May and June respectively.
This was on top of an effective rate hike of 40 basis points (bps). fixed deposit facility (SDF) 3.75 per cent.
During this period (April to June 2022), the MPC also changed its stand to take back the housing.
Talking about the prospects for global growth, Das said there is a risk of significant downside in the near term due to the ongoing monetary policy normalization on the one hand and the rapid tightening of the financial situation due to persistent geopolitical tensions on the other.
“They are also fueling recession concerns around the world, even talking of a recession in some parts of the world,” he said.
Noting that the benefits of globalization come with some risks and challenges, Das said price shocks of food, energy, commodities and critical inputs are transmitted across the world through complex supply chains.
In fact, he said, recent developments call for greater recognition of global factors in domestic inflation dynamics and macroeconomic growth which underscore the need for increased policy coordination and dialogue between countries to achieve better results.