 "Shaktikanta Das")
Reserve Bank of India (RBI) Governor Shaktikanta Das stated that bringing inflation to the four per cent target was the central bank's focus going forward in the current financial year (FY25).
In a press conference, the RBI Governor highlighted the importance of monitoring food price inflation, particularly in light of potential impacts from climate events temperatures this year; however, they reiterated, "inflation targeting framework is the focus" of the reserve bank.
In a press conference, the RBI Governor highlighted the importance of monitoring food price inflation, particularly in light of potential impacts from climate events temperatures this year; however, they reiterated, "inflation targeting framework is the focus" of the reserve bank.
Following the announcement of the monetary policy where the RBI's Monetary Policy Committee (MPC) retained the repo rate at 6.5 per cent for the seventh consecutive time, Das made the following observations:
1. Inflation is moderating, and GDP growth is robust
2. The MPC remains focused on aligning inflation to the target on a durable basis, deriving satisfaction from the progress made under disinflation, but the task is not yet finished.
3. The financial sector continues to be stable.
4. The external sector also continues to be resilient.
More From This Section
5. "As we move towards RBI at 100 (RBI completed 90 years earlier this year), the Reserve Bank will continue to focus on preserving stability and promoting our financial sector and a payment system that is robust, resilient, and future-ready," the RBI governor said.
Speaking on inflation, Das said, "The elephant moves at a slow pace. The last mile of inflation is always challenging."
Also Read: RBI MPC: Here are the major announcements made by Governor Shaktikanta Das
Also Read: RBI MPC: Here are the major announcements made by Governor Shaktikanta Das
Reserve accumulation
The Governor emphasised the priority of maintaining stability in the Indian rupee, highlighting RBI's ongoing efforts to build reserves as a buffer against future risks, thereby strengthening the national balance sheet.
"Over the last 4-5 years we have been building up our reserves depending on the prevailing market situation. And this continues because the reserves act as a buffer against future risks, especially in situations where the cycle turns and there is a significant outflow of dollars. This whole endeavour adds to the strength of the national balance sheet," Das said.
Monitoring food price inflation
Governor Das acknowledged the potential impact of above-normal temperatures on food crops, particularly vegetables, emphasising the need for vigilance amidst volatile food price inflation. Adding that food price inflation had been volatile with it reaching 7.8 per cent in February.
The RBI said, "The actors keep shifting, at first it was cereals, then vegetables and at the moment it is proteins... These are short-duration spikes, but since they are reoccurring they give a persistent character."
The RBI projects CPI will be 4.5 per cent for the whole year, and growth will be seven per cent.
Extension of deadline for forex derivatives
RBI deferred implementing rules on exchange-traded forex derivatives to May 3 from April 5, on Thursday. Clarifying on this the RBI said, that there is no change in the central bank's approach to foreign exchange risk management.
"This has always been a part of RBI's policy. The extension of the deadline came as a response to requests from market players who needed more time," the RBI governor said.
