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CPI inflation for FY23 projected at 6.7%: RBI governor
- RBI MPC has retained the CPI Inflation projection for FY23 at 6.7%
- The MPC sees second-quarter CPI at 7.1% compared to 7.4% previously
- Standing Deposit Facility (SDF) rate is adjusted to 5.15%
The Reserve Bank of India (RBI) Monetary Policy Committee has retained the Consumer Price Index (CPI) Inflation projection for FY23 at 6.7%. The second quarter CPI is seen at 7.1% compared to 7.4% previously, while Q3 CPI is seen at 6.4% against 6.2% projected earlier. The Q4 CPI projection is retained at 5.8%. The Q1FY24 CPI is seen at 5%.
The RBI Governor Shaktikanta Das on Friday announced that the rate-setting panel voted unanimously to hike the benchmark interest rate by 50 basis points (bps) to 5.4% with immediate effect. The policy stance is retained at Withdrawal of Accommodation to check inflation.
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The Standing Deposit Facility (SDF) rate is adjusted to 5.15%. The Marginal Standing Facility (MSF) and bank rate are revised at 5.65%.
RBI Governor Shaktikanta Das while delivering his MPC statement said, the Indian economy is impacted by global situations. The globalisation of inflation coincides with the de-globalisation of trade, he said.
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Consumer price inflation has eased from its surge in April but remains uncomfortably high and above the upper threshold of the target, said Das.
“Inflation is expected to remain above the central bank’s 6% threshold in the second and third quarters of this fiscal year, for which the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium,” he added.
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Governor Shaktikanta Das also said that RBI will remain vigilant on the liquidity front, and conduct two-way fine-tuning ops as warranted (VRR and VRRR). Will do fine-tuning ops on both fronts depending on evolving liquidity conditions, he added.
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“The RBI continued to ‘front-load’ its rate hikes in line with our expectations. The central bank highlighted that while inflation might moderate in the coming months, uncertainty around these pressures continues to remain high, necessitating the need for a 50-bp rate hike. Expect the RBI to take the repo rate to 5.75% in this cycle,” said Sakshi Gupta, Principal Economist, HDFC Bank
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