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Reading: RBI  bulletin: “The target  of  adjusting  inflation  to the  4% target  is  far from  guaranteed”  
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RBI  bulletin: “The target  of  adjusting  inflation  to the  4% target  is  far from  guaranteed”  

Team Happen Recently
Last updated: 2023/12/21 at 12:45 PM
Team Happen Recently
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 While consumer price index  (CPI)-based  inflation for FY24 is expected to be  5.4%,  for the first three quarters of  2024-25,  it is  predicted to be 4.6%,  according to  ‘State  of the  Economy’  article published in the  December  Bulletin of the RBI magazine.  

  According to an article published in the monthly bulletin of the Reserve Bank of India (RBI), if  inflation is not brought back to the  4%  target and  “sticked to it”,  there  is a possibility  that  growth  will suffer. 

 While consumer price index  (CPI)-based  inflation for FY24 is expected to be  5.4%,  for the first three quarters of  2024-25,  it is  predicted to be 4.6%,  according to  ‘State  of the  Economy’  article published in the  December  Bulletin of the RBI magazine.  

 “The  goal  of  sustainably adjusting  inflation  to  the  4%  target  is  “unable to be guaranteed”.  If inflation is not brought  to the target and  tied to that target, it  is  likely  that growth  will weaken,”  the article  wrote.  Headline inflation,  measured by  annual  changes in the all-India CPI,  rose  to  5.6%  in November  2023,  from  4.9%  in October. In September, CPI  was at  level of 5.02%.  RBI Governor Shaktikanta Das has  emphasized  that the central bank is  fully  focused on achieving the  4%  inflation target. In  its  December policy, the RBI kept the repo rate  –  the  policy rate  –  unchanged at  6.5%  for the fifth  consecutive  time  on  concerns  about rising  inflation amid  food  price uncertainty.  

 The article  added  that  lower  inflation  figures in  September and October 2023 and  a  prolonged pause in  monetary policy  stance have led to some dystopia  among some stakeholders –  a longer-term view absurd that  inflation  is expected to move toward  the  4%  target  at some point. . The  distant future  is clear, while the  high  short-term risk  of  a spike  in inflation  due to  food  fluctuations is unclear.  

Under these conditions,  we are calling  for  interest  rate cuts or at least  the central bank  to  embark on the  path of  moderating key interest rates. Such opinions jeopardize  the  implementation  of monetary policy  aimed at pursuing  the  goal of  sustainably adjusting  inflation  to  the  target (4%),”  the article  stated,  adding that these  opinions This bias  also  weakens  the foundations of growth. 

  The article  was compiled  by RBI Deputy Governor Michael Patra and other central bank officials. The  views  expressed  in the article are  those  of the authors and not of the  institution, RBI said. Previous  editions of the  State  of the  Economy  article  highlighted  that  household  inflation expectations  remain unmet; Business  and consumer confidence in the inflation outlook  has not  yet  become  optimistic.  In real time,  inflation  affects  discretionary consumer  spending, which  in  turn reduces revenue  growth  as well as  investments by manufacturing companies, he  said. On  the  economy, the article  said,  despite significant global headwinds, the Indian economy  remains  the fastest growing major economy in 2023.

  Growth  is  expected  to be sustained in  the second half of 2023-24  and 2024-25 despite  certain  moderation.  

 The RBI, in its December monetary policy, revised  its  real GDP  forecast  for FY24 to  7%,  from  6.5% previously.  “In India, the  ongoing pickup in  broad-based  economic activity  is  likely  to  be  supported  by  lower  input costs and  lower  corporate  profits,” he  said. Domestic financial markets  are  also  supported  by the  continued  strength of the real economy.  

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