RBI Governor Das defends FY23 inflation projection

Price stability is top priority for the Reserve Bank, he says

February 14, 2022 10:58 pm | Updated 10:58 pm IST

Shaktikanta Das

Shaktikanta Das | Photo Credit: DANISH SIDDIQUI

Special Correspondent 

NEW DELHI 

The central bank’s inflation projection of 4.5% for 2022-23 is quite robust and a single-day price movement cannot help arrive at an accurate projection, Reserve Bank of India Governor Shaktikanta Das asserted on Monday. 

Stressing that price stability is the uppermost priority for the central bank, Mr. Das said that making a projection for the full year based on current crude oil prices of $95 a barrel.

“…You will definitely go wrong because it may go up even further or come down steeply. So, therefore based on several factors, we take in to account a particular range within which crude prices are expected to fluctuate, considering all the factors that can be anticipated or foreseen,” he said. 

“At this point of time, our inflation projection is quite robust and we stand by it. If there is something, totally unforeseen, which nobody can expect, of course, that is different. And we are saying that it is contingent on the risks on the upside and downside,” Mr. Das underlined. He was speaking after a meeting of the RBI board, which was also addressed by Finance Minister Nirmala Sitharaman.

January’s retail inflation breaching the 6% threshold should not cause concern or trigger alarm, he said, adding that the character and the content of inflation in advanced economies is different from the character, content and the drivers of inflation in India.

“The momentum of inflation in India is on the downward slope since October 2021. It’s primarily the statistical reasons, the base effect, which has led to higher inflation, especially in the third quarter (2021-22) and a similar base effect will play a role in the coming months,” he noted. 

“There is a delicate balancing between inflation and growth and the RBI is fully aware of its commitment to inflation keeping in mind the objective of growth. This is precisely what the provision in the law requires or expects the RBI to do,” he concluded.

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