The RBI Is Still Dead Set On Getting Inflation Back To 4% : Shaktikanta Das

While voting for the status quo in interest rates, Governor Shaktikanta Das noted that the Reserve Bank was laser-focused on bringing retail inflation back to 4 percent over time. Retail inflation, which was above 6% in May and June, has begun to fall, and it was 4.35 percent in September. According to the governor, food inflation is expected to reduce significantly in the near term if there are no spells of unseasonal rain.

All members of the MPC voted unanimously to keep the policy repo rate at 4%. While inflation may fall short of August forecasts, it is projected to remain uneven, sluggish, and volatile, according to Deputy Governor Patra. "To avoid unwelcome surprises," Das adds, "our operations must be deliberate, measured, well-timed, and well-telegraphed." By the end of the year, oil prices are expected to reach or exceed USD 85 per barrel, with an average of USD 80 or more in the second half.

According to Ashima Goyal, an MPC external member, global price shocks have become more persistent, contributing to sticky core inflation. Petroleum tax cuts are "essential" to arrest an expanding trend that could lead to continued domestic inflation. She went on to argue that the "climate change activism" that has contributed to the current price increases will reduce future oil usage. According to Bhide, investment activity has increased but has not yet reached levels observed in 2019-20.