It has been reported that in the monetary policy meeting that was held on August 8 to 10, the members of the Monetary Policy Committee (MPC), in majority, have expressed caution on the rise in retail inflation in the near-term.
Shaktikanta Das, the RBI Governor, cautioned that headline inflation is anticipated to set significantly in July-August, driven by the increase in prices of tomato and other vegetables.
It has also been said that in view of the supply disruptions caused by bad weather, it is likely that headline inflation will rise in the coming months. Along with this, an El Nino event amid volatile global food prices is going to create uncertainty in the food prices.
Ashima Goyal, a member of the six member MPC panel said that important factors which need to be taken into account when it comes to deciding future rate course include progress in the rest of the monsoon and possible supply side measures.
On August 10, the Monetary Policy Committee (MPC) kept the repo rate unchanged, as inflation continued to pose a threat to Asia’s third-largest economy. The MPC kept the repo rate at 6.5 percent.
In August monetary policy revision was made by the central bank to its inflation forecast for 2023-24, increasing it by 30 bps to 5.4 percent.
Assuming a normal monsoon, the latest CPI inflation projections for 2023-24 was revised to 5.4 per cent, with Q2 at 6.2 per cent, Q3 at 5.7 per cent and Q4 at 5.2 per cent. CPI inflation for Q1:2024-25 is projected at 5.2 per cent.
On August 10, during the monetary policy address, the RBI Governor said that given the likely short-term nature of those shocks, monetary policy could look through high inflation prints caused by such shocks for some time.