Mumbai (Maharashtra) [India], April 5 : Unveiling the decisions of the first monetary policy committee meeting of FY25, RBI Governor Shaktikanta Das emphasized the significance of keeping the elephant in the forest while stating that the CPI inflation projections for FY25 has been reduced to 4.5 per cent from earlier 4.7 per cent.
The governor said when CPI inflation had peaked at 7.8 per cent in April 2022, the elephant in the room was inflation. "The elephant in the room was CPI inflation. The elephant has now gone out the elephant has now gone out for a walk, and appears to be returning to the forest," Das said.
"Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5 per cent with Q1 at 4.9 per cent; Q2 at 3.8 per cent; Q3 at 4.6 per cent; and Q4 at 4.5 per cent. The risks are evenly balanced" said Das.
Inflation has come down significantly, but remains above the 4 per cent target, according to the RBI Governor.
The deflation in fuel is likely to deepen in the near term, following the cut in LPG prices in March and a normal monsoon this year.
The inflation in India has eased to 5.1 per cent in January and February 2024 from 5.7 per cent in the December 2023. The inflation has peaked during December. RBI Governor said
"Growth has continued to sustain its momentum, surpassing all projections. Headline inflation has eased to 5.1 per cent during both January and February, and this has come down to 5.1 per cent in these two months from the earlier peak of 5.7 per cent in December... Looking ahead, robust growth prospects provide the policy space to remain focused on inflation and ensure its descent to the target of 4 per cent."
RBI Governor said that the Current Account Deficit of India has also narrowed significantly. India's merchandise and services exports have grown significantly. The Forex reserve of India has reached an all-time high with a forex reserve of 645.6 billion dollars. The Net FPI inflow to India stands at 41.6 billion dollars
"In 2021 our forex reserves had also reached 642 plus billion US dollars. Then, following the commencement of the war in Ukraine and the outflow of dollars from India, as well as from several other countries on safe-haven demand, there were concerns that the forex reserves of India were going down" said RBI Governor.
Further RBI Governor added that the Global economy is resilient with stable outlook and the Global trade is expected to grow faster in the coming months. The global equity markets also gained while the dollar and the bond market is volatile. Expecting positive growth in 2024 he further said that the global trade is going to improve in 2024.
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