Mumbai: Inflation remains elevated, underscoring the need for monetary policy to keep inflationary expectations firmly anchored, according to an article published in the Reserve Bank’s latest bulletin issued on Friday.
The retail inflation cut short its three-month declining trend and inched up to 7 per cent in August, mainly due to higher food prices.
The consumer price index (CPI) based inflation, which the RBI factors in for its monetary policy, has remained above its upper threshold of 6 per cent for eight months in a row.
Loss of momentum in global economic activity may be taking the edge off inflation, which remains elevated, said the article by a team lead by RBI Deputy Governor Michael Debabrata Patra.
The Indian economy is poised to shrug off the modest tapering of growth momentum in the first quarter of 2022-23, it said.
Aggregate demand is firm and poised to expand further as the festival season sets in. Domestic financial conditions remain supportive of growth impulses, the article noted.
“Inflation remains elevated and above the tolerance level, underscoring the need for monetary policy to keep second order effects contained and inflation expectations firmly anchored,” the authors said.
The central bank, however, said the opinions expressed in the article are those of the authors and do not represent the views of the Reserve Bank of India (RBI).
Based on the recommendations of the RBI Governor-headed Monetary Policy Committee (MPC), the central bank has already raised the key short-term lending rate by 140 basis points in three tranche since May this year to check inflation.
The next meeting of the MPC is scheduled during September 28-30, 2022. PTI

Press Trust of India