RBI Governor assures ease of inflation in second half of 2022-23

The central bank Governor Shaktikanta Das said that inflation is likely to ease gradually in the second half of the current financial year.

He added that price stability is key to maintaining macroeconomic and financial stability. He said that the monetary policy must take timely actions to anchor inflation and inflation expectations so as to place the economy on a strong and sustainable growth pedestal.

Das said, “Overall, at this point of time, with the supply outlook appearing favourable and several high frequency indicators pointing to resilience of the recovery in the first quarter (April-June) of 2022-23, our current assessment is that inflation may ease gradually in the second half of 2022-23, precluding the chances of a hard landing in India.”

“We will continue to calibrate our policies with the overarching goal of preserving and fostering macroeconomic stability. In this endeavour, we will remain flexible in our approach while being cogent and transparent in our communication. If history is any guide, I am optimistic that our actions will usher in a new era of prosperity in the years ahead,” he added.

Highlighting the conduct of the monetary policy in managing inflation, Das said that inflation was expected to moderate significantly to the target rate of 4 percent by Q3:2022-23, with a projected average inflation rate of 4.5 per cent for 2022-23.

This assessment was based on an anticipated normalisation of supply chains, the gradual ebbing of COVID-19 infections and a normal monsoon. The median inflation projection from the Survey of Professional Forecasters at 5.0 per cent for 2022-23 was also quite benign. This narrative was, however, completely overtaken by the war in Europe since end-February, which led to a sharp spike in global crude oil and other commodity prices, the RBI Governor said.