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Monetary Restraint

Document Cited in Related
Vincent
Published date10 August 2024
AuthorSNS
Publication titleStatesman, The (India)
The central bank's stance is a calculated one, rooted in the necessity to bring inflation down to its medium-term target of 4 per cent. Despite significant global volatility, particularly influenced by actions from other major central banks, the RBI remains steadfast in its focus on domestic inflationary trends. Governor Shaktikanta Das's comments underscore this resolve, pointing out the stubborn nature of India's food inflation, which significantly impacts the public's perception and experience of overall inflation. Maintaining price stability is crucial for sustainable economic growth

The RBI's decision to retain the 'withdrawal of accommodation' stance reflects a commitment to this principle. While inflation has shown a downward tre nd, and core inflation, excluding food and energy prices, has decreased, the persistently high food prices ~ especially of vegetables such as onion, potato and tomato continue to pose a challenge. This is particularly significant in a country like India, where food constitutes a substantial part of household expenditure and, thus, the inflation experience for the average consumer.

The RBI's approach also considers the resilience of domestic economic activity. India's growth forecast for fiscal 2025 remains unchanged at 7.2 per cent, a figure that, while lower than the previous year's 8.2 per cent, still signifies robust economic performance. This resilience provides the central bank with the leeway to maintain its current...

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