RBI will take required action to keep inflation in check: FM Sitharaman

In a recent report the RBI said that the retreat of inflation is expected to be stubborn and beset by supply shocks in the upcoming year

The Reserve Bank of India (RBI) will take necessary steps to manage inflation within "expected limits", Finance Minister Nirmala Sitharaman said at a post-Budget event in Jaipur on Monday.

"In emerging markets, the situation is unique to each of the countries. In that I think, RBI is watching the Indian economy and taking a call as and when it is required," she said. The retail inflation breached the RBI's upper-tolerance limit of 6.52 per cent in January after staying under it for two consecutive months. 

In a recent report, the RBI said, "Over the year ahead, the retreat of inflation is expected to be stubborn and beset by supply shocks. Almost every other component of the consumer price index – statistical and exclusion-based measures – is showing a hardening of price pressures," the RBI said. 

"Hence, the stance of monetary policy will need to remain disinflationary for consumer spending and business investment to pick up on a durable basis and provide a solid foundation for an acceleration of growth," it added.

On February 8, while announcing the monetary policy decision to hike the repo rate by 25 basis points, Governor Shaktikanta Das said also said that the inflation remains "sticky". The monetary policy committee (MPC) of the RBI has cumulatively increased the policy repo rate by 250 bps to 6.5 per cent between May 2022 and February 2023. Some analysts have predicted that there might be a pause from here on.

Recently, a report by HSBC Securities and Capital Markets (India) also said that the Indian economy could see another bout of inflation as the rural demand revives and the informal sector recovers from the pandemic lows. 

(With agency inputs)