India’s central bank is committed to its inflation mandate and inflation’s likely rise in January towards the upper end of its target range should not create panic, central bank chief Shaktikanta Das said on Monday. .
“Today’s inflation rate is expected to be around 6%. So that shouldn’t come as a surprise or cause alarm because we’ve taken that into consideration,” Das said.
“There is a kind of major and delicate balance between inflation and growth and the Reserve Bank is fully aware of its commitment to inflation,” he added.
Das made the comments after meeting with the country’s finance minister and central bank board in a regular post-budget meeting.
Retail inflation in India likely accelerated to 6.0% in January, driven by higher prices for consumer goods and telecommunications as well as a relatively low rate a year ago, according to a Reuters poll.
Das reiterated that India’s inflation trajectory had been on a downward slope since October and that despite the surge in global crude oil prices in recent weeks, the central bank had factored in all scenarios.
Last week, the RBI’s monetary policy committee left rates and stance unchanged to ensure a broad-based recovery and projected retail price inflation to ease to 4.5% in the next financial year.
Das also said that the Reserve Bank of India is working on the borrowing program for the next fiscal year, while the country’s inclusion in global bond indices is also a work in progress.
The government is expected to borrow up to 14.95 trillion rupees from the market over the next financial year, with traders hoping the RBI will step in to help the market absorb supplies, announcing bond purchases on the open market or other measures.
Das said the government’s decision to sell sovereign green bonds will also help broaden the base of foreign investors.