RBI closely monitors inflation trends, effect of its past actions: Central bank bulletin
The Reserve Bank of India (RBI) is closely monitoring inflation trends as well as the effect of its past actions, according to the November 2022 central bank bulletin. It added that the central bank assesses weak indicators like consumer and business surveys. ; macroeconomic, financial and global commodity market developments; and financial stability.
“Domestic inflation remains high. We closely monitor inflation trends as well as the effect of our past actions. In our view, price stability, sustained growth and financial stability should not be mutually exclusive,” RBI Governor Shaktikanta Das said in the central bank‘s November bulletin.
He also said, “No one can match Arjuna’s prowess, but our constant effort is to keep Arjuna’s eye on inflation, which is our main objective. At the same time, we continue to assess other related factors such as the evolution of inflation-growth dynamics; flexible indicators like our consumer and business surveys; macroeconomic, financial and global commodity market developments; and financial stability. In other words, our policy measures are based on an assessment of the overall situation. We will continue to orient our policies accordingly.”
According to the RBI bulletin, consumer price inflation reigns high in all economies due to continued cost pressures from high food and energy prices and persistent bottlenecks. pandemic-induced supply chain disruptions, although there are signs of easing inflation in a few economies, particularly among emerging markets. economic (EME).
“Among BRICS economies, inflation in Brazil fell from 7.2% in September to 6.5% in October, in Russia to 12.6% in October from 13.7% in September, while in China , inflation fell to 2.1% in September-October 2022 from 2.8% in September 2022,” he added.
Retail price inflation in India in October hit a three-month low of 6.77%. Inflation in rural areas in October 2022 fell to 6.98%, while that in urban areas fell to 6.50%.
However, this is the 10th month that inflation based on the Consumer Price Index (CPI) has remained above the Reserve Bank of India’s (RBI) upper tolerance limit of 6%. ). By September, retail price inflation in India had accelerated to a five-month high of 7.41%. Previously, retail price inflation was 7.04% in May, 7.01% in June, 6.71% in July and 7% in August.
On commodity prices, the RBI said global commodity prices remained volatile in October and early November as slowing global growth dampened demand despite the war in Ukraine, providing continued upside. . Crude oil prices averaged US$93 per barrel in October and US$97 during the first half of November (through November 14, 2022) due to slowing global demand and firming of the US dollar.
In India, he said, “The cumulative purchase of rice during this kharif marketing season has already peaked from last year’s harvest. Although wheat supply has fallen sharply, the good news is that rabi plantings are increasing year on year, supported by good northeast monsoon rains and water storage levels in reservoirs. . »
The RBI’s Monetary Policy Committee last week (4 November) to discuss and draft a report for the government on why the central bank has failed to keep retail price inflation below target 6% for three consecutive quarters since January of this year.
The RBI has raised the key repo rate by 190 basis points since May this year. In May, the central bank conducted its off-cycle monetary policy review to raise the repo rate by 40 basis points to control inflation. The next RBI Monetary Policy Committee meeting is scheduled to be held from 5-7 December 2022.
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