The Reserve Bank of India’s interest rate setters have mainly blamed global factors for failing to meet its inflation target, according to people with knowledge of a letter the monetary policy panel was obliged to write to the government.
The war in Ukraine and the resulting jump in energy and food costs, and supply disruptions due to the pandemic, are among the main reasons, the people said, asking to remain anonymous because the correspondence is private. The detailed narrative does not focus much on the path ahead, suggesting only that the worst of inflationary pressures is probably behind us, the people said.
Little is known about the contents of the letter sent earlier this month after India’s consumer inflation topped the upper limit of the 2%-6% band for three straight quarters. While the panel, led by Reserve Bank of India governor Shaktikanta Das, was mandated by law to explain its failure to cap prices, the government is not required to make the information public.
This view is in line with what Shaktikanta Das has said publicly about inflation having peaked. Economists polled by Bloomberg currently forecast the benchmark repo rate at 5.9% to 6.4%, and inflation easing to about 5% in a year’s time from 6.8% now.
A spokesperson for the finance ministry declined to comment. An email sent to RBI for comment did not elicit an immediate response.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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