In New Delhi, Reserve Bank Governor Shaktikanta Das said on Thursday that the issue of changing stance on interest rates is quite premature given the gap between current inflation and the 4 per cent target.
"Given the gap between current inflation and the 4 percent target, the question of changing stance is quite premature... when we move towards 4 percent CPI (retail inflation) on a sustained basis is when we will have the confidence to think about a change of position," Das said in an interview with CNBC-TV 18.
He said the path to inflation is progressing according to expectations, but added that it is the last leg of the path to 4 percent that will be the most difficult or complicated.
Retail inflation based on the Consumer Price Index (CPI) has been projected at 4.5 percent with quarterly projections of 4.9 percent in the first quarter (April-June), 3.8 percent in the second quarter, 4.6 percent in the third quarter and 4.5 percent. in the fourth quarter, the RBI had said in its June bi-monthly report.
The Reserve Bank, which is mandated to ensure that inflation remains at 4 per cent (with a margin of 2 per cent on either side), primarily takes the CPI into account when making its monetary policy.
He had said headline inflation softened further during March-April, although persistent food inflation pressures offset advances in disinflation in core groups and deflation in fuel groups.
Despite some moderation, pulses and vegetable inflation remained firmly in double digits.
Vegetable prices are experiencing a rebound in summer after a slight correction in the winter season. The fuel deflationary trend was mainly due to LPG price cuts in early March.
Core inflation slowed for the 11th consecutive month since June 2023. Services inflation moderated to a record low and goods inflation remained contained.
Regarding GDP, Das said many growth drivers are playing their role and the growth momentum was very strong in the fourth quarter of the last financial year and continues to be strong in the first quarter.
The June policy also revised upward the GDP growth projection for the current fiscal year to 7.2 per cent from 7 per cent due to rising private consumption and revival of demand in rural areas.
When the projected GDP growth of 7.2 per cent for 2024-25 is realised, it will be the fourth consecutive year with growth at or above 7 per cent.
"Given the gap between current inflation and the 4 percent target, the question of changing stance is quite premature... when we move towards 4 percent CPI (retail inflation) on a sustained basis is when we will have the confidence to think about a change of position," Das said in an interview with CNBC-TV 18.
He said the path to inflation is progressing according to expectations, but added that it is the last leg of the path to 4 percent that will be the most difficult or complicated.
Retail inflation based on the Consumer Price Index (CPI) has been projected at 4.5 percent with quarterly projections of 4.9 percent in the first quarter (April-June), 3.8 percent in the second quarter, 4.6 percent in the third quarter and 4.5 percent. in the fourth quarter, the RBI had said in its June bi-monthly report.
The Reserve Bank, which is mandated to ensure that inflation remains at 4 per cent (with a margin of 2 per cent on either side), primarily takes the CPI into account when making its monetary policy.
He had said headline inflation softened further during March-April, although persistent food inflation pressures offset advances in disinflation in core groups and deflation in fuel groups.
Despite some moderation, pulses and vegetable inflation remained firmly in double digits.
Vegetable prices are experiencing a rebound in summer after a slight correction in the winter season. The fuel deflationary trend was mainly due to LPG price cuts in early March.
Core inflation slowed for the 11th consecutive month since June 2023. Services inflation moderated to a record low and goods inflation remained contained.
Regarding GDP, Das said many growth drivers are playing their role and the growth momentum was very strong in the fourth quarter of the last financial year and continues to be strong in the first quarter.
The June policy also revised upward the GDP growth projection for the current fiscal year to 7.2 per cent from 7 per cent due to rising private consumption and revival of demand in rural areas.
When the projected GDP growth of 7.2 per cent for 2024-25 is realised, it will be the fourth consecutive year with growth at or above 7 per cent.
