The Reserve Bank of India (RBI) in its article on the ‘State of the Economy’ published in the June 2024 Bulletin has said that the goal of aligning inflation with the target of 4 per cent remains a work in progress as long as food price pressures persist. It also said the retail inflation is gradually easing, but volatile and elevated food prices are interrupting the path of disinflation.
The article, authored by a team lead by the Reserve Bank of India Deputy Governor Michael Debabrata Patra, noted that global growth was resilient in the first quarter of 2024, and many central banks have pivoted towards a less restrictive monetary policy stance in response to the fall in inflation in their economies. In India, high-frequency indicators suggest the real GDP growth in Q1 FY25 is broadly maintaining the pace it achieved in the preceding quarter. Also, it stated the prospects for agriculture are brightening with the early landfall of the southwest monsoon.
The RBI has been mandated by the government to ensure retail or headline inflation remains at 4 per cent with a margin of 2 per cent on either side. It mentioned the fact that the ongoing disinflation is being driven by the softening of the core component of consumer price index (CPI) inflation to a new low validates the stance of monetary policy.
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