“Headline inflation declined by 1.3 percentage points on an annual average basis to 5.4 per cent in 2023-24. Easing supply chain pressures have led to a broad moderation in core inflation and early signs of an above-normal southwest monsoon bode well for the inflation outlook in 2024-25, the RBI said in its annual report released on Thursday.
However, the increasing incidence of climate-related shocks brings considerable uncertainty to food inflation and the overall inflation outlook. According to the report, low reservoir levels especially in the southern states and the outlook of above normal temperatures during the early months of 2024-25 require close monitoring.
“Volatility in international crude oil prices, persistent geopolitical tensions and increased volatility in global financial markets also pose upside risks to the inflation trajectory.Taking these factors into account, CPI inflation for 2024-25 is estimated at 4.5 per cent, with risks evenly balanced,'' the report said.
The RBI has also highlighted the need to continue with the current monetary stance to keep inflation under control.
“There is a need to continue with the path of disinflation until inflation reaches the percentage target on a sustainable basis,” the MPC (Monetary Policy Committee) kept the policy repo rate unchanged at 6.50 per cent in its April 2024 meeting, as the monetary The policy states that inflation expectations and ensuring full transmission should remain actively deflationary. “The MPC decided to focus on the housing recovery to ensure that inflation remains in line with the progressive target while supporting growth,” the report said.
The Reserve Bank said it will remain "nimble and flexible" in its liquidity management through core and fine-tuning operations of both repo and reverse repo.It will deploy an appropriate mix of instruments to control frictions as well as sustainable liquidity to ensure funding. Market interest rates evolve in an orderly manner to maintain financial stability.
However, the increasing incidence of climate-related shocks brings considerable uncertainty to food inflation and the overall inflation outlook. According to the report, low reservoir levels especially in the southern states and the outlook of above normal temperatures during the early months of 2024-25 require close monitoring.
“Volatility in international crude oil prices, persistent geopolitical tensions and increased volatility in global financial markets also pose upside risks to the inflation trajectory.Taking these factors into account, CPI inflation for 2024-25 is estimated at 4.5 per cent, with risks evenly balanced,'' the report said.
The RBI has also highlighted the need to continue with the current monetary stance to keep inflation under control.
“There is a need to continue with the path of disinflation until inflation reaches the percentage target on a sustainable basis,” the MPC (Monetary Policy Committee) kept the policy repo rate unchanged at 6.50 per cent in its April 2024 meeting, as the monetary The policy states that inflation expectations and ensuring full transmission should remain actively deflationary. “The MPC decided to focus on the housing recovery to ensure that inflation remains in line with the progressive target while supporting growth,” the report said.
The Reserve Bank said it will remain "nimble and flexible" in its liquidity management through core and fine-tuning operations of both repo and reverse repo.It will deploy an appropriate mix of instruments to control frictions as well as sustainable liquidity to ensure funding. Market interest rates evolve in an orderly manner to maintain financial stability.
